AI Infrastructure Demand Drives Bullish Outlook for Lumentum and Broadcom

Market analysts are urging long-term investors to look past short-term geopolitical volatility in the Middle East to focus on the structural growth of AI networking and chipsets. Recent evaluations from top-ranked analysts suggest significant upside for companies providing the physical infrastructure necessary for artificial intelligence. JPMorgan analyst Samik Chatterjee has significantly raised the price target for Lumentum Holdings (LITE) to $950, up from $565. The upgrade follows increased clarity on demand for optical and photonic technologies, specifically within scale-up networks. Chatterjee highlighted co-packaged optics (CPO) and optical circuit switches (OCS) as primary growth drivers. Financial projections for Lumentum are aggressive, with Chatterjee expecting 2027 earnings per share (EPS) of $24, with potential to exceed $25. Looking further ahead, he anticipates 2028 EPS to surpass $36, driven by expanded capacity and new customer acquisitions. Similarly, Broadcom (AVGO) is seeing strong institutional conviction following a multi-year agreement with Meta Platforms to support AI compute infrastructure. Benchmark analyst Cody Acree reiterated a buy rating with a $485 price target, noting that the Meta deal increases confidence in Broadcom's ability to surpass $100 billion in AI chip revenue by fiscal 2027. Broadcom's custom XPU business now spans six customers, including Google and Anthropic. Furthermore, the company is positioned to benefit from OpenAI's deployment of first-generation XPUs in 2027, which is expected to exceed 1 GW of compute capacity. These developments underscore a broader trend of institutional confidence in the 'picks and shovels' of the AI revolution.