Lumentum Holdings Inc.

Marvell Technology is upgraded to Buy, with a new fair value of $187.35 standalone and $199.48 including the Lumentum acquisition. MRVL's fair value rose due to upgraded fiscal 2028/2031 guidance and a significant Google custom silicon win, offsetting prior market share concerns. The Lumentum deal is value-accretive if LITE exceeds 4.5x MRVL shares; DSP displacement risk is partially mitigated by Lumentum's laser business.

AI optical stocks are rallying, and one laser maker is far ahead of the group as traders take a second look at a quarterly report they'd sold off hard. Coherent (NYSE:COHR | COHR Price Prediction) stock trades at $192.

Lasers for optical interconnect in AI data centers could be a bigger bottleneck than memory chips. Marvell aims to buy Lumentum for $115 billion in enterprise value -- enabling it to address this issue.

Lumentum (LITE) is technically in oversold territory now, so the heavy selling pressure might have exhausted. This along with strong agreement among Wall Street analysts in raising earnings estimates could lead to a trend reversal for the stock.