Stewart Asset Management: AI Infrastructure Drives Lumentum Holdings’ (LITE) Potential

Stewart Asset Management: AI Infrastructure Drives Lumentum Holdings’ (LITE) Potential

Tue, September 8, 2026 at 4:55 PM GMT+3 3 min read

• LITE +10.00%

Stewart Asset Management's flagship portfolio returned 15.97%, net of fees, in the second quarter, and the S&P 500 Index gained 15.20%. YTD, it appreciated 5.37%, net of fees, and the S&P 500 Index gained 10.21%. The letter can be downloaded here. Despite geopolitical uncertainties, share prices surged higher as emerging prospects for a ceasefire in the Middle East restored market composure and investor optimism for continued earnings growth in the second half of the year. Volatility in share prices was noted, particularly tied to industrial trends like AI, with comparisons made to the internet boom and personal computer adoption. Despite concerns about extreme valuations and potential corrections, the conclusion is that strong earnings growth is fundamental to rising share prices, emphasizing the importance of investing in robust businesses. Please check the fund's top five holdings for its best picks in 2026.

In its second-quarter 2026 investor letter, Stewart Asset Management highlighted Lumentum Holdings Inc. (NASDAQ:LITE). Lumentum Holdings Inc. (NASDAQ:LITE) is a leading technology company that manufactures and sells optical and photonic products. On September 04, 2026, Lumentum Holdings Inc. (NASDAQ:LITE) closed at $881.26 per share. Over the past month, Lumentum Holdings Inc. (NASDAQ:LITE) gained 13.83%, and its shares are up 519.81% over the past year. Lumentum Holdings Inc. (NASDAQ:LITE) has a market capitalization of $79.05 billion, and its stock has traded within a 52-week range of $144.52 to $1,085.68.

Stewart Asset Management stated the following regarding Lumentum Holdings Inc. (NASDAQ:LITE) in its Q2 2026 investor letter:

"During the quarter we initiated a small investment in Lumentum Holdings Inc. (NASDAQ:LITE), a leader in optical networking — the hardware that moves data between AI chips, servers, and data centers. We believe AI infrastructure spending is driving an optical upgrade cycle from which Lumentum may benefit. Demand outstrips supply, and customer agreements now extend through 2027 as data centers grow in number and size. Capturing this opportunity requires execution on capacity expansion and continued hyperscaler willingness to invest in AI infrastructure. The primary risks associated with the company are its concentration of revenue from a small number of customers, product timelines shifting and emerging technologies. However, we believe that the positives noted above outweigh these risks."

Lumentum Holdings Inc. (NASDAQ:LITE) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 111 hedge fund portfolios held Lumentum Holdings Inc. (NASDAQ:LITE) at the end of the second quarter, down from 123 in the previous quarter. While we acknowledge the potential of Lumentum Holdings Inc. (NASDAQ:LITE) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article we covered Lumentum Holdings Inc. (NASDAQ:LITE) and noted that COHR and LITE, both AI optic suppliers, reported earnings above expectations, and analyzed why LITE reacted positively and COHR declined. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

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This article is originally published at Insider Monkey.