Lumentum’s stock has delivered the sixth-best performance in the S&P 500 this year. The strong rally has earned the optical components maker a spot in the Nasdaq-100 index.
The company specializes in photonics and laser technology. Its products are used in data communications, industrial manufacturing, and 3D sensing.
Investors have pushed the stock higher amid growing demand for high-speed networks. The company benefits from the rapid expansion of artificial intelligence and cloud computing infrastructure.
Joining the Nasdaq-100 is expected to attract more institutional investors. Index funds that track the benchmark will now automatically buy Lumentum shares.
The stock has more than doubled in value this year. The sharp rise reflects optimism about Lumentum’s role in enabling faster data transmission.
The company will replace a current member of the index. The exact effective date for the change has not been disclosed.
Analysts remain cautious about the stock’s valuation. Some warn that the rally may have priced in future growth.
