“Multi-Year Shortages” Coming for Optical Suppliers, Says T. Rowe Price. Here’s What That Means for LITE and CIEN

A T. Rowe Price analyst recently said something worth paying close attention to if you’re watching the AI infrastructure buildout. His focus wasn’t on NVIDIA itself, but on what breaks first as the buildout scales.

“I think there’s areas like NAND for example, that’s gone from more of a commodity now, more strategic. And then also optical. Lumentum or Ciena, for example, are areas where you’re going to see a lot of growth and probably shortage for the multi-year here.”

His broader point was that massive scale, system resolution, and cluster construction are driving performance demands that the supply chain simply isn’t built for yet. NAND storage has quietly shifted from a commodity input to a strategic resource, and optical connectivity is the next chokepoint.

Lumentum: Already at the Starting Line

Lumentum (NASDAQ:LITE | LITE Price Prediction) just reported numbers that make the shortage thesis feel very real. The stock is up 69.52% year-to-date and has gained 882.3% over the past year.

Q2 FY2026 revenue came in at $665.5M, up 65.5% year-over-year, with non-GAAP operating margin expanding 1,730 basis points to 25.2%. But the forward guidance is what really stands out.

CEO Michael Hurlston laid it out clearly:

“Our forward guidance calls for over 85 percent year-over-year revenue growth, yet we are only at the starting line for two substantial opportunities: optical circuit switches (OCS) and co-packaged optics (CPO). In OCS, we are scaling rapidly to meet extraordinary customer demand that has already driven our backlog well beyond $400 million. In CPO, we received an incremental multi-hundred-million-dollar order, deliverable in first half calendar 2027.”

A backlog exceeding $400 million in OCS alone, plus a fresh multi-hundred-million-dollar CPO order due in 2027 — that’s the physical manifestation of the shortage Tony is describing.

Ciena: The Network Backbone Play

Ciena (NYSE:CIEN) is the other name Tony flagged, and its Q1 FY2026 print tells a similar story. Revenue hit $1.427B, up 33.1% year-over-year, with direct cloud provider revenue surging 76% and representing 42% of total revenue. Ciena is up 55.59% year-to-date.

CEO Gary Smith described “unprecedented, broad-based demand” as customers race to monetize their AI investments. Ciena raised its full-year revenue guidance to $5.9B-$6.3B for FY2026.

The risk worth watching on both names is supply chain constraints — the very shortage predicted could paradoxically limit how fast these companies can convert backlog into revenue. Customer concentration is also real: three customers account for 47.4% of Ciena’s revenue.

The thesis is straightforward: AI data centers need optical connectivity the way highways need asphalt, and the asphalt plants aren’t keeping up. Lumentum and Ciena are two of the few companies positioned to supply what the hyperscalers desperately need — and the backlog numbers suggest the queue is already forming.