How Lumentum Became a Critical Piece of the AI Boom

**Zaid** (0:00)
Welcome back to The Rundown, interview edition. Today, I'm talking to Michael Hurlston, the CEO of Lumentum. Lumentum is a company that's caught the attention of investors, they design and manufacture optical components and high-performance lasers that allows for data to move at high speeds. And it's become a critical component of AI data centers. Business has surged over the last year, and so has the stock price, jumping over 1000% in the last 12 months. So in today's conversation, we'll get into what Lumentum actually makes, why AI has been a game changer, the $2 billion investment from Nvidia, and some of the challenges of running a company in the middle of a boom cycle. This was a really insightful conversation. I think you guys are gonna love it. So let's get into it.
All right, guys, today we are talking to the CEO of Lumentum, Michael Hurlston. Michael, welcome to The Rundown.

**Michael Hurlston** (0:53)
Zaid, good to meet you. Really good to spend time on the show.

**Zaid** (0:56)
I'm super excited for today's conversation. I was doing a little research about you and your background. I realized that you took over as CEO of Lumentum February of 2025, so what, like 15 months ago?
And I'm just curious, did you know you were signing up to be on a rocket ship when you took over or was there a point after you took over where you knew like this is just gonna be a wild ride?

**Michael Hurlston** (1:20)
You know, the board came in and they showed me a forecast and I said, well, that's the forecast. Of course, in my own mind, I de-rated it by 50% or so. And I said, well, that's the forecast. It looks a lot better than what I'm currently facing in my old job. And I said, okay, let me sign up.
Of course, it's not 2X, it's 4X what they said. So it's really been incredible. It's an incredible journey.

**Zaid** (1:50)
Well, I wanna just zoom out a little bit and kind of learn more about the company. I think the company's become like a bit of a well-known company, especially in the investor space, because your stock has 10X since the last year or so. So can you explain in the simplest terms to someone who's not super technical, what Lumentum does and why this AI infrastructure build out has been such a tailwind for the business?

**Michael Hurlston** (2:16)
Sure. So inside the data center, you've obviously got compute. We all know about that. The Nvidia GPUs, all these TPUs, you've got switches, right? Broadcom has done so very well on their switch portfolio. You've got storage. This is where Micron and these other names that you've covered in the past, again, have done so very well. But to connect all of those things, to connect the compute, to connect the switches, to connect the storage, you need connectivity of some variety to the other. And that's historically been Ethernet, just like you'd have in your office, in your home. There's an Ethernet cable, a copper cable. But now that switching, because of the speeds, because of the bandwidth that needs to be carried, the world is switching from these Ethernet connections to optics.
And what we do is we make fiber optics, fiber optic connectivity that goes inside the data center and forms all of these various connections.

**Zaid** (3:21)
So fiber has been a thing, I mean, for decades. We have fiber in the street right outside of my house, fiber underneath the ocean.
What is it about the AI data center build out that requires fiber within the data center and close to the chip that you can't use copper anymore?

**Michael Hurlston** (3:41)
Yeah, first of all, you have it right. Our company has been around for 10, 12 years now.
Fiber was the backbone of the Internet. So if you remember back in the 2000s, we had this huge Internet bubble. And fiber optics companies came in at that time to run fiber across the United States. And as you correctly said, across the ocean and things like that. What's new is the speeds at which we need to carry this data now are shorter are necessitating shorter and shorter distances. And it's those shorter distances that create a lot more volume and a lot more opportunity for the fiber optics companies. So we're used to these long haul applications where we might carry data over kilometers over tens of kilometers. Now what we're talking about is meters. We're talking about 10 meters. We're talking about five meters. It think as things get faster and faster, copper has a natural resistance to it. Light doesn't. Nothing moves faster than light.