Lumentum Stock Surges on Report of Potential US Ban on Chinese AI Hardware

Shares of Lumentum (NASDAQ: LITE) jumped 11.6% in pre-market trading after a report indicated the U.S. government is preparing to ban imports of new Chinese-made data center hardware. The potential restrictions could significantly shift the market in favor of domestic optical component manufacturers.

Potential Ban on Chinese Hardware

According to a report from Reuters, the Trump administration is drafting a ban that would target new data center equipment from China. The Federal Communications Commission (FCC) is reportedly preparing specific restrictions on Chinese optical transceivers, which are critical components in artificial intelligence (AI) data centers.

Such a policy would directly benefit U.S.-based suppliers like Lumentum. By limiting competition from Chinese firms, the ban could expand the addressable market for domestic manufacturers and allow them to capture a larger share of the rapidly growing AI infrastructure build-out.

Analyst Confidence and Supply Scarcity

Adding to the positive sentiment, Mizuho reiterated its Outperform rating on Lumentum with a $1,100 price target. The firm cited strong demand for indium phosphide (InP) and projected that Lumentum could see revenue growth of more than 35% quarter-over-quarter for the September quarter, based on signals from key suppliers.

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The theme of supply tightness was reinforced by Lumentum's CEO, Michael Hurlston. Speaking at the Paris RAISE summit, Hurlston warned that shortages of InP are on track to become more severe than the current memory market crisis, underscoring the company's strong pricing leverage in a constrained supply chain.

A Sector-Wide Rally

The news sparked a broad rally across the U.S. optical components sector, confirming a sector-wide catalyst rather than a stock-specific event. Lumentum's peers, including Applied Optoelectronics (NASDAQ: AAOI) and Coherent (NYSE: COHR), also posted sharp gains in response to the report.

The move pushed Lumentum's pre-market price toward $870.08, placing it within reach of its 52-week high of $1,085.68. The company is scheduled to report its fourth-quarter fiscal 2026 earnings on August 11.