The Stock That Went Up 1000% | Lumentum CEO

Everyone talks about Nvidia GPUs. Few people talk about the lasers connecting them. Michael Hurlston is the CEO of Lumentum (NASDAQ: LITE), one of the world's leading suppliers of optical networking and laser technologies powering AI data centers. Before joining Lumentum in 2025, he served as CEO of Synaptics and previously led Finisar, making him one of the few executives to lead three public technology companies. In this conversation from the RAISE Summit in Paris, Michael explains why AI is forcing a once-in-a-generation shift from copper wiring to fiber optics, why hyperscalers are demanding millions of optical components, and why manufacturing these systems has become one of the biggest bottlenecks in AI infrastructure. He also discusses optical networking inside GPU clusters, the future of "optical scale-up," and how the same laser technology could eventually power internet connectivity in space. "What you get with fiber optics is the ability to move data faster over longer distances with less heat & less power than you get with electricity." We cover: › Why AI data centers are replacing copper with fiber optics › The manufacturing bottlenecks facing optical infrastructure › Why hyperscalers need millions of optical components › The coming transition to "optical scale-up" › Space lasers and the future of internet connectivity › AI infrastructure, geopolitics, and U. S. manufacturing › Michael's journey leading Finisar, Synaptics, and now Lumentum Michael Hurlston: https://www.linkedin.com/in/michael-hurlston-1b2274/ Molly O’Shea: https://x.com/MollySOShea Sourcery: ⁠https://x.com/sourceryy 𝐄𝐏𝐈𝐒𝐎𝐃𝐄 𝐋𝐈𝐍𝐊𝐒 YouTube: https://youtu.be/TCoJtpFd4yM 𝐒𝐏𝐎𝐍𝐒𝐎𝐑𝐒 • Brex https://brex.com/sourcery—The modern finance platform, combining the world’s smartest corporate card with integrated expense management, banking, bill pay, & travel. https://brex.com/sourcery • MongoDB https://mongodb.com/ai–Millions of developers and more than 65,200+ customers across industries, including ~75% of the Fortune 100, rely on MongoDB for their most important applications. With integrated capabilities for operational data, search, real-time analytics, & AI-powered data retrieval, MongoDB helps organizations everywhere move faster, innovate more efficiently, & simplify complex architectures. https://mongodb.com/ai • AssemblyAI http://assemblyai.com/sourcery–Millions of developers use AssemblyAI to power their voice ai applications and features. One API gives you access to best-in-class speech-to-text, voice agent, and speech understanding models for both pre-recorded and real-time audio. Granola, ClickUp & HeyGen are scaling with AssemblyAI - get $50 of free credits today at http://AssemblyAI.com/sourcery http://assemblyai.com/sourcery 𝐓𝐈𝐌𝐄𝐒𝐓𝐀𝐌𝐏𝐒 (00:00) Michael Hurlston, CEO at Lumentum Holdings (00:58) Backstage with Tony Kim at RAISE Summit (01:53) What optical connectivity actually means (03:31) The $10 trillion irony of the data center build-out (05:37) Scaling up inside a data center (08:38) Tripling revenue in 5 quarters (10:13) From Finisar to Synaptics to Lumentum (11:51) Why Lumentum went all-in on data centers (13:10) Why space is the next big market for optical lasers (14:06) Debunking laser myths (16:40) Why copper is about to disappear from the server rack (19:00) The geopolitics of the optical supply chain (20:16) The advice that shaped Michael's path

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  I joined Lumentum at a time where Board of Directors showed me a forecast and they said, "Hey, here's what we think the company is going to do." And I, of course, discounted it by about 50% and it's been probably 4X over what they even showed me. I've been there about five quarters now. And in those five quarters, we've tripled our top line revenue. So the stock price has gone up 10 or 12 times. At one point, it was up over $1,000. We have a high-performing stock largely because people are seeing the future. Now, we're being asked by these hyperscalers to deploy in millions, tens of millions of units. So it's really changed the dynamic in our industry, not just for Lumentum. Every single optical company now is dealing with different scales than we ever had before.

• 0:42Speaker 00

  The question we get all the time, and I think you've asked many of the people on your show, is, "Is this a bubble?"

• 0:58Molly O'Shea?

  Michael, welcome to Sorcery.

• 1:00Speaker 00

  Molly, thanks for having me on. Really a pleasure.

• 1:03Molly O'Shea?

  So we're here in Paris at Raze. Were you just on stage? What were you doing over there?

• 1:06Speaker 00

  I was onstage. I gave a keynote with Tony Kim. And I think Tony Kim was over here earlier today talking to you. So you've got all the celebs, I guess.

• 1:14Molly O'Shea?

  Yeah, he's a big fan of you, by the way. I didn't know if you knew that.

• 1:19Speaker 00

  He's a big fan of yours, too. He told me, he goes, "This is a great setup. You'll enjoy it." I have a lot of fun talking to Molly. So there we go.

• 1:25Molly O'Shea?

  So what did you guys talk about onstage?

• 1:27Speaker 00

  Optics is becoming a big thing, right, in the data centers. And Tony was sort of framing. We have all these funny terms: "scale across," "scale out," "scale up," "scale in." And Tony was walking the audience through what all of these different things mean and what Lumentum's role is in all of that, which is we're in the middle of a pretty exciting time right now as the data center uses more and more optical connectivity.

• 1:53Molly O'Shea?

  So for people who don't know what optical connectivity means, can you explain that? We're moving from copper wires to optics and transferring data with light. But what does that mean?

• 2:04Speaker 00

  Obviously, there are fibers. And fibers are essentially glass. They're just conductors. Instead of having wires, copper wires, you have fibers. And fibers basically contains the light, just like a wire or a copper strand contains electricity. And so what you get with fiber optics is the ability to move data faster over longer distances with less heat and less power than you get with electricity. So if you think about the way data centers are architected today, it's mostly copper wires, right? Ethernet cables are essentially copper wires. And copper wires, the physics of copper is there's a resistive property.

• 2:49Speaker 00

  So as data tries to move across the wires, it gets hotter and the resistance prevents it from going all that far. And so now, inside the data center, you have speeds are increasing, bandwidths are increasing, and copper can no longer carry these signals, the distances they need to go. And so you have more and more optics now coming into the data center. And optics essentially is just light, right? We're just shining light along a fiber. And that light is modulated, meaning it turns on and off at really, really high speeds. And that's what creates the transmission.

• 3:31Molly O'Shea?

  I think it was Tony, we were on a call before our interview and he was pointing out the great irony of spending $10 trillion over the next couple of years on data center build-out to move data from meters down to centimeters and millimeters. So how is this process and this build-out, how are you managing it?

• 3:52Speaker 00

  Yeah, look, I mean, you know, fiber optics has been the backbone of the internet for years, right? So when the internet first came in, was the sort of the first great wave of the optical companies. And what happened was you're digging up the earth in the United States, in Paris, in London, wherever it might be, and installing these fiber optic cables because the internet now is traveling over huge distances. And so the first real optical, you know, sort of the big wave was now building the backbone of our internet infrastructure across the world.

• 4:35Speaker 00

  And you actually have fiber optic cables today that run under the ocean. So if we want to have communication that goes between Paris and New York, there are fiber optic cables that are actually buried in the ocean and those fiber optic cables conduct these signals. But as I said a minute ago, what's happened is now you're going to faster and faster speeds. And when you go to faster and faster speeds, the physics say that copper can't work or it doesn't work as well. And so what you have now is this internet, this big backbone, this big infrastructure that we've played in for numerous decades. And those volumes are actually relatively modest. You're talking about volumes of, let's say, 1,000 units a quarter.

• 5:20Speaker 00

  And now, we're being asked by these hyperscalers to deploy in millions, tens of millions of units. So it's really changed the dynamic in our industry, not just for Lumentum, but I think every single optical company now is dealing with different scales than we ever had before.

• 5:37Molly O'Shea?

  What is it like, and I'm sure there's lots of challenges, but like, what is it actually tangibly like getting spun up in these new data centers? What actually goes on behind the scenes?

• 5:49Speaker 00

  There's a lot of manufacturing. I mean, I think if you, you know, you obviously know the industry super well. When you talk to companies like Nvidia and Broadcom, they manufacture most of their products at TSMC. So they essentially outsource the manufacturing problem. The optics industry doesn't have that luxury, right? It's a very sort of niche industry. It's one that's grown up over, you know, multiple decades. And so for us, we actually operate our own fabs. So in some respect, we're like the TSMC of the optical industry. Optics depends on a different material. Semiconductors use something called CMOS.

• 6:34Speaker 00

  And all of the semiconductors that you know well are built on CMOS. Memories built on CMOS. TPUs are built on CMOS. The Nvidia GPU is built on CMOS. But lasers and fiber optics are built on a different material called indium phosphide, kind of a mouthful, but it's this indium phosphide. And that's a very boutique thing. It's a little more of a niche. And so we actually have to make our own indium phosphide products. We have to manufacture those ourselves. And that requires pretty long lead times, right? It takes us multiple years to build a fab and it requires a lot of expense. So we're a very CapEx-heavy company.

• 7:18Speaker 00

  We spend a lot in trying to build out and manufacture our products. And it takes a while. So there's a bottleneck that's developing. I think you talked about it with Tony. And as these fiber optics becomes more and more prevalent in the data center, it's creating an ever-tighter noose around the industry because there's only so much we can do so quickly.

• 7:40Molly O'Shea?

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• 8:25Molly O'Shea?

  It's time to get Brex AF. Learn more at brex.com/sorcery. That's B-R-E-X dot com slash S-O-U-R-C-E-R-Y. Bye. That supply constraint is creating a lot of demand, but it's Also creating tremendous demand for the stock, which is crazy to see. The stock was up, I think almost a thousand percent at one point. How do you handle that mentally as a CEO when you know that you are constrained?

• 8:56Speaker 00

  It's tough. I mean, they, you know, the interesting thing that the question we get all the time, and I think you've asked many of the people on your show, is, is this a bubble? Right? And what's interesting about the optical industry is if there are no more data center build outs, if you don't see this crazy rate of construction that we've seen over the past three or four years, still, you're going to have a shift within the existing properties from electrical signaling to optics, right? And so we, our growth rate, which has been astronomical, we've grown three times, been with the company only a short period of time, I've been there

• 9:39Speaker 00

  about five quarters now. And in those five quarters, we've tripled our top line revenues. So the stock price has gone up, you know, 10 or 12 times. As you correctly point out, at one point, it was up over a thousand dollars. It's come back, I think, on a lot of the concern around AI over the last couple of weeks. But we have a high performing stock largely because people are seeing the future and seeing the future start to play out where you have more and more optical components going into these data centers. It's driving super high demand for our products.

• 10:13Molly O'Shea?

  So you joined as CEO in 2025. What is it like to take the reins in the craziest market ever? And also give a little bit of your background of where you were before.

• 10:26Speaker 00

  Yeah, I mean, this is, you know, an interesting thing. I think if you look at most CEOs, they either retire or somebody retires them for them, right? You don't see too many CEOs change jobs. And I've actually been lucky enough now to be CEO of three different public companies. The first public company I was CEO of is a company called Finisar that was optical. That's now the heartbeat of one of our biggest competitors, but also one of our biggest partners in coherent coherence built around the engine that was Finisar that we ended up selling to them. Then I was a CEO of a semiconductor company. I'm mostly a semiconductor guy and I was CEO of

• 11:08Speaker 00

  a company called Synaptics for five or six years. And then I joined Lumentum, as you're pointing out, at a time where the the board of directors showed me a forecast and they said, hey, here's what we think the company is going to do. And I, of course, as one does, discounted it by about 50%. And it's been probably 4X over what they even showed me. So we've just hit the company with the right products at absolutely the right time. Really, our team, before I got there, the previous CEO, set it up well, right products, right roadmap. And we have all of the goods that people are looking for now as they convert their data centers to more and more of the fiber optics.

• 11:51Molly O'Shea?

  How do you manage that plan and keep pivoting the strategy as you overperform?

• 11:57Speaker 00

  You know, actually, what we've tried to do, Molly, is simplify, right? So I think when I came into the company, there was a lot of products that were geared toward the old telecom industry, selling still to AT&T, to Verizon. There were products that we were doing that were around industrial lasers. Interestingly enough, their lasers are used to cut metal for car doors. They're used to machine different parts. And we had a business in that. And what I've done is said, okay, look, let's focus our efforts on the data center. There's enough here going on that we really want to simplify our business as much as we possibly can, focus on where we think the biggest

• 12:40Speaker 00

  opportunities are. And that's the data center. So we've almost become a pure play data center. Got some risk, right? If the data center, you know, ends up rolling over in that market, hiccups a bit, we'll be caught. But I don't think that that's going to happen. And even if, as I said a minute ago, you start seeing a slowdown in data center builds, we're in really, really good shape because you still see a conversion inside the data center from, from electrical to optical.

• 13:10Molly O'Shea?

  Also, they're going to space.

• 13:12Speaker 00

  They're also going to space. Yeah, our buddies at SpaceX are trying to do these build outs. And obviously, lasers are super important for all the same reasons. If you can put a laser in the ocean and transmit across the Pacific, you can certainly put lasers in space and create this reality of an internet in space, right? It's going to be necessary. There's a lot of, there's a high degree of difficulty outside the lasers, but we can help enable that.

• 13:41Molly O'Shea?

  It also sounds super cool.

• 13:42Speaker 00

  It is. It is super cool. I mean, you know, lasers are used today, as you likely know, in things like the Iron Dome, right? Lasers you use to shoot down enemy missiles. So they have been deployed in space. These are not nearly as powerful, right, as those things. But we've had a lot of experience as an industry and certainly our company in deploying products in space.

• 14:06Molly O'Shea?

  That's a really good point. Okay, so we did this interview with Tom Mueller, who was the first employee at SpaceX. And we were talking about data centers in space and we put out the videos and the YouTube comments, you know, there's a lot of fear mongering about birds and killing birds with the lasers and all that kind of stuff. So can you dispel some of the misconceptions about lasers and their strength?

• 14:28Speaker 00

  And look, it's all about power. I'll give you a really good example, right? The iPhone with the Face ID, that's a laser product that beams lasers onto your face. And, and, you know, one of the concerns of, of course, Apple had was, hey, I want to have people's eyes burning out, right? So the power of those lasers are relatively modest and you're never going to burn somebody's eye out. Similarly, you're not going to have birds burning up as these lasers shoot data down to the, to the earth, right? It all has to do with the power. You can have these super high power lasers that can shoot down missiles that can cut through metal. You can have modestly powered lasers that power the internet backbone. And you can have these super low power lasers that do things like the Face ID.

• 15:13Molly O'Shea?

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• 15:57Molly O'Shea?

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• 16:40Molly O'Shea?

  Okay, so thinking about the future, what are you most, I don't even know if you could plan out this far, to be honest. But what are you most looking forward to in maybe a time horizon that makes sense for you, but I usually say 12 months?

• 16:54Speaker 00

  12 months. Look, I, one of the things that that we will see within the next 12 months is this idea of we call optical scale up. Okay. And so what is optical scale up? I know you talked to Tony earlier today and he's one of the bright minds in the industry. Very lucky to get that conversation. Optical scale up, if you look at a rack, you look at one of these servers that gets deployed by a hyperscaler and you go creep around the backside, there are a ton of ethernet cables. I mean, you probably use ethernet in your house today, maybe to wire your PC as you're doing all your work at home or in the office. There's an ethernet cable that

• 17:38Speaker 00

  plugs into the side of the PC, right? And if you look at the rack, there's tons and tons of these ethernet cables, miles and miles of wire that run in the back of the servers. And in the next 12 months, we'll see some of those copper wires move to optical. Now, the reality, and Tony and I were talking about it earlier today over at the conference, optics is more expensive. So people don't want to do it if they, if they don't have to. It's a more expensive medium than is copper. Copper is a well trod path. People understand it. People understand the expense that there is. And generally, they'll try to avoid using optics. But it's getting to a point

• 18:21Speaker 00

  where the physics of the back of that rack, that connectivity that sits in the back of the rack is such that you have to do it. And so we already have a lot of fiber optics in the data center. We don't have yet, we don't have deployments in these racks themselves. We have a lot of connections inside the data center that go out, we call scale out, but we don't yet see scale up. I think in the next 12 months, we will. And that's going to drive volumes that are unprecedented in the optical industry, right? Volumes of tens, hundreds of millions of units where, again, we're sort of used to dealing in scales of thousands.

• 19:00Molly O'Shea?

  Where is the craziest place that this has taken you?

• 19:03Speaker 00

  That's a good question. I mean, you know, what's interesting, and you probably appreciate this, most of the hyperscalers and the strength right now is in the US, right? So US market has been incredibly strong. Our business is very heavily centered on the US.

• 19:21Speaker 00

  China is a difficult market, right? And you've talked about this, I think, in some of your previous shows. The geopolitics of China are very tricky.

• 19:33Speaker 00

  Between the US optical component suppliers and how much we supply into the Chinese data centers, very little. We don't supply very much here into the Chinese data centers. Whereas Chinese optical component suppliers, some of our competitors, have a pretty big footprint in US data centers. So there's been a lot of push and pull around the geopolitics of the situation. How are we going to see a world where it gets mandated by either the government or by the customers themselves to use more US content? We'll see. Right now, Chinese suppliers have a pretty big presence in the US market.

• 20:16Molly O'Shea?

  Okay. Well, as we close out, I have one question dedicated to one of our partners. It's Brex. They're a performance credit card, corporate credit card. So they're all about spending smarter, moving faster. But I take this in a personal lens. So I'm really curious from your standpoint. You've built up a tremendous career. You've been CEO of three public companies. I like to think performance component of that is like who you surround yourself with, who you're mentored by, who you're inspired by, those types of figures along the way. Who are those figures for you?

• 20:47Speaker 00

  Look, I've been super lucky. I mean, you know, you talk about Brex and performance, and I think you've got the right theme and the right partner for what you're doing. I've been very lucky. My father, interestingly enough, was an electrical engineer, right? He was one of the first electrical engineers that came over from Europe. He was actually was based in the United Kingdom and came over just early before I was born. And he had tremendous influence. He told me as I was growing up, you can have any major you want in college just as long as the last word is engineering, electrical, mechanical, civil. I don't care. Got to be an engineer. And he had tremendous impact, I think, on me.

• 21:30Speaker 00

  And then as I got in my career, I spent a lot of years at a company called Broadcom, which I know you've covered pretty extensively. Broadcom was a very interesting company in that it was bought by Avago, and then the name stayed. The Broadcom name was the surviving name. But there was a gentleman at Broadcom, a guy called Bob Rango, that I worked for for years and years. And Bob served on several boards and had a long and prestigious career. But he had a lot of impact on me sort of as a business guy and how I think about business problems.

• 22:06Molly O'Shea?

  It's amazing. Tony said dead people.

• 22:10Speaker 00

  Okay, that's a different one. That's a different one. See, Tony's a historian, right? You know, I asked Tony about the World Cup, and he's like, who's playing, right? He focuses very much on history and art and things like that. He's got a place here in Paris.

• 22:26Molly O'Shea?

  Yeah.

• 22:27Speaker 00

  So he's a very erudite gentleman. So I can't compete with that, Molly.

• 22:31Molly O'Shea?

  He said Caesar and Napoleon, and we're like, all right.

• 22:33Speaker 00

  Okay, you win.

• 22:34Molly O'Shea?

  You're on another level over there.

• 22:37Speaker 00

  You win. Yeah, you win. He's a brilliant guy.

• 22:40Molly O'Shea?

  Amazing. Well, Michael, thank you so much. Appreciate you taking the time.

• 22:44Speaker 00

  Thank you. Thank you for having me in this beautiful place here in Paris overlooking the La Toulerie, right? Not too bad.

• 22:51Molly O'Shea?

  I didn't know that's what it was called, but now I know.

• 22:54Speaker 00

  There you go. You guys learned, see?

• 22:57Molly O'Shea?

  Thank you.

• 22:57Speaker 00

  Thank you.

• 22:58Molly O'Shea?

  Huge thank you to the entire Raze team for an incredible event. And thank you to Brex, MongoDB, and Assembly AI for making this trip and series possible. If you enjoyed this conversation, you're going to love the rest of the Raze series with Tony Kim from BlackRock, Scott Wu from Cognition, Andrew Feldman from Cerebras, Rodrigo Yang from Samenova, Michael Hurlston from Momentum, CJ Desai from MongoDB, and many, many more like our hot takes that we did at a secret location that you can find on X, YouTube, and Instagram. Subscribe to Sorcery on YouTube for more conversations with the people shaping AI and join the free newsletter, you can also do paid,

• 23:38Molly O'Shea?

  at sorcery.vc for weekly insights on AI, robotics, enterprise software, consumer semiconductors. Did I say AI? AI again, and everything that's coming next, like funding announcements and all big things in tech. Thank you. Bye.