Key Points
Lumentum rose 5.2% to $1,103.36** Friday after CEO Michael Hurlston said its optical components are "completely sold out" through early 2029.
Lumentum can't meet about 70% of demand for some products through next year, and about 30% for others through 2028.
Apple slipped 1.1% to $336.64** after Nikkei Asia reported it cut October component orders for the iPhone 18 Pro and Pro Max by at least 15%.
The same force is behind both stories: the AI build-out is soaking up parts, and memory chips are making phones more expensive.
Two headlines hit Friday morning. Together, they explain where the money in tech is going right now.
In Tokyo, Lumentum CEO Michael Hurlston told Bloomberg his company can't build its products fast enough. Meanwhile, Apple's suppliers told Nikkei Asia that Apple wants fewer parts for its newest iPhones.
One company is turning customers away. The other is struggling to find enough of them.
"There's No End in Sight"
Lumentum makes lasers and optical parts that move data at high speed between servers inside AI data centers. As AI clusters grow, copper wiring can't keep up, and light is replacing it.
"We are really trying to catch up, add capacity as fast as we can, but we are very, very far behind what customers want," Hurlston said. "We are completely sold out, so there's no end in sight."
Six months ago, Hurlston said Lumentum's capacity would be sold out through 2028. Now it's early 2029. Even with the company adding capacity as fast as it can, the shortage got worse, not better.
Lumentum gained $54.76, or 5.2%, to close at $1,103.36 on Friday, back above its Oct. 5 close.
The run has been staggering. The stock started 2026 at about $386 and closed at $1,091.67 on Oct. 5, a gain of roughly 183%. Over the past year it has climbed about 570%, beating Nvidia, Dell and even Micron. Its market value has grown to around $100 billion.
The business backs it up. Fiscal fourth-quarter revenue more than doubled to $1.01 billion, and Lumentum guided to about $1.25 billion for the September quarter. In March, Nvidia agreed to invest $2 billion in the company, and Lumentum joined the S&P 500 the same month.
Apple's Memory Problem
Apple's story runs the other way.
Nikkei Asia reported that Apple told suppliers to cut October component orders for the iPhone 18 Pro and iPhone 18 Pro Max by at least 15% from what it originally requested. One supplier executive said the cuts ran as high as 20% for both models: "We don't know how things would develop from here."
The reason: soaring memory chip costs forced price increases that dampened demand. The iPhone 18 Pro starts at $1,199, $100 more than last year's model, and the 1TB version costs $300 more. TrendForce estimated in August that the 256GB iPhone 18 Pro costs about 38% more to build than its predecessor, with memory alone making up roughly a third of its component cost.
Apple fell $3.78, or 1.1%, to $336.64 on Friday. The next few weeks will show whether the order cuts are a blip or a sign that buyers are pushing back on higher prices. The company reports earnings on Nov. 2.
The memory squeeze is the same one that made Micron's numbers so extraordinary. As we wrote when Michael Burry made his Micron trade, memory makers just posted results nobody thought possible. Every chip that goes into an AI server is one that doesn't go into a phone, and consumers are paying the difference.
Delta Says Fuel Is the New Memory
Delta Air Lines told a similar story Friday, with jet fuel instead of chips.
The airline earned $1.72 a share on $17.59 billion in adjusted revenue, below the $1.75 and $17.67 billion analysts expected. It was Delta's first earnings miss in two years. Fuel expenses jumped 62% to $4.1 billion in the quarter, and Delta now expects a $6 billion increase in fuel costs for the year.
Like PepsiCo the day before, Delta cut its outlook. It now expects full-year earnings of $5.10 to $5.60 a share, down from $6.50 to $7.50 in July. CEO Ed Bastian insisted demand "remains strong," and revenue grew 16% on flat capacity. Investors took the cut in stride: Delta shares finished essentially flat at $82.17, and United Airlines also closed little changed at $107.46, ahead of its own report next week. Like Apple, Delta is learning how much of a cost spike it can pass on to customers.
The AI Trade After Thursday's Scare
Friday's Lumentum news landed one day after the Financial Times reported that OpenAI's annualized revenue was nearing $50 billion, about $20 billion less than the $70 billion figure that had circulated among investors. That report helped push the Philadelphia Semiconductor Index down 3.4% on Thursday.
Hurlston's comments were a reminder that, whatever OpenAI's revenue looks like, the companies building AI data centers are still ordering every optical part they can get. Oracle rebounded 4.6% to $141.40 after Thursday's 5.5% drop. Nvidia slipped 0.5% to $229.28, and Taiwan Semiconductor, which reports Thursday, fell 1% to $453.31.
Stocks rebounded broadly Friday. The S&P 500 rose 0.6% to 7,811.54, the Nasdaq gained 0.6% to 27,366.17, and the Dow climbed 423 points, or 0.8%, to 51,654.95. The VIX, Wall Street's fear gauge, eased to 14.84. The biggest story outside tech was telecom: T-Mobile plunged 13.3% after SpaceX agreed to buy nationwide wireless spectrum, its worst day since 2013.
What Lands Next
Wednesday: ASML reports before the bell. Its orders show how much chip-making equipment customers plan to buy next year.
Thursday: Taiwan Semiconductor reports. It has guided to third-quarter revenue of $44.6 billion to $45.8 billion.
Nov. 2: Apple reports. Its September-quarter numbers will show how the iPhone 18 started, but not October's cuts.
Lumentum says it's sold out until 2029. Apple is cutting orders in month one. In this market, the companies selling the picks and shovels of AI hold the pricing power, and everyone else is paying for it.
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
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