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3 Laser Systems Stocks to Watch From a Prospering Industry
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The Zacks Laser Systems and Components industry participants, such as Lumentum (LITE - Free Report) , IPG Photonics (IPGP - Free Report) and MicroVision (MVIS - Free Report) , benefit from upbeat demand from electric vehicles, electronics, semiconductors and healthcare end-markets. Robust demand for high-power continuous wave and pulsed laser for cutting and battery-processing applications, growing demand for high-performance optical devices, and the ongoing proliferation of Generative AI (GenAI), cloud computing, autonomous driving, IoT and 5G are the key catalysts. However, industry participants are suffering from challenging macroeconomic conditions globally, weak economic conditions in Europe and a sluggish economic environment in China. Continued economic uncertainty with low PMI numbers in Europe, North America and Japan is impacting industrial demand and capital investments.
Industry Description
The Zacks Laser Systems and Components industry comprises companies offering high-performance fiber lasers, fiber amplifiers and diode lasers, optical and photonic products, and scanning technology solutions. The key end markets are semiconductors, metrology, advanced communication and medical devices. Industry participants also provide high-precision 3D sensors and system products for inspection and metrology. Moreover, in the medical devices space, laser and other energy-based aesthetic treatments can achieve therapeutic results by affecting structures within the skin. Developing safe and effective aesthetic treatments has resulted in a well-established market for these procedures. The industry also operates in the cyclical surface mount technology and semiconductor capital equipment markets.
3 Laser Systems & Components Industry Trends to Watch
Emerging Applications Driving Demand for Lasers: The industry is benefiting from increasing demand for emerging applications like additive manufacturing, facial recognition, gesture recognition, LiDAR applications and IoT. Advanced lasers, especially those with 3D sensing (3DS) capabilities, are enhancing interactions using technology. Notably, 3DS — the technology that allows users to create 3D printable objects, control games with body gestures and measure objects — is in high demand.
Laser-IoT Combination Supports Efficiency: As industries are increasingly adopting automation techniques, combining lasers with IoT improves operating efficiency. IoT-supported manufacturing equipment is far easier to update with firmware. The combination reduces costs and increases flexibility and reliability manifold by enabling material-handling capabilities through remote sources. Strong demand from semiconductor and allied markets, which are seeing a rapid shift toward the production of micro and nano devices, is another positive for industry participants.
Challenging Macroeconomic Condition Hurts Prospect: Industry participants suffer from sluggish capital spending by original equipment manufacturers. Moreover, persistent inflation, energy headwinds in Europe and weakness in China are expected to hurt industry participants in the near term.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Laser Systems and Components industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #91, which places it in the top 36% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Given the bright industry outlook, there are a number of stocks worth watching in the industry. But before we present the top industry picks, it is worth looking at the industry’s shareholder returns and current valuation first.
Industry Underperforms Broader Sector and S&P 500
The Zacks Laser Systems and Components industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500 composite over the past year.
The industry has appreciated 9.3% over this period compared with the S&P 500’s return of 25.3% and the broader sector’s growth of 27%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month P/S, which is a commonly used multiple for valuing Laser Systems and Components stocks, we see that the industry is currently trading at 10.03X compared with the S&P 500’s 5.79X. It is also trading above the sector’s trailing 12-month P/S of 8.01X.
Over the last five years, the industry has traded as high as 12.64X and as low as 4.26X, with a median of 6.79X, as the charts below show.
LITE's experience in this field may lead to new opportunities as cloud computing and data centers continue to develop and require ever-increasing speeds and capacities.
The company secured a second win in the 800G hyperscaler market, suggesting potential for growth in this high-performance computing segment. Clients are already incorporating its 200G EMLs into their upcoming transceivers, which puts it in a strong position for the impending switch to 200G per lane.
LITE shares have jumped 84.9% in the trailing 12-month period. The Zacks Consensus Estimate for the company’s fiscal 2025 earnings has increased by a penny to $1.68 per share over the past 30 days and indicates 66.34% growth over the fiscal 2024 figure.
Price & Consensus: LITE
IPG Photonics: This Oxford, MA-based company is suffering from weakness in general manufacturing and e-mobility.
IPG Photonics’ success in the EV battery manufacturing sector, supported by advanced laser welding solutions and strategic partnerships with companies like Miller Electric for handheld welding solutions, is expected to drive top-line growth.
IPGP shares have lost 21.3% in the trailing 12-month period. The Zacks Consensus Estimate for this Zacks Rank #3 company’s 2025 earnings has been unchanged at $1.95 per share over the past 30 days and indicates 29.14% growth over 2024’s estimated figure of $1.51 per share.
Price & Consensus: IPGP
MicroVision: Redmond, WA-based MicroVision is a well-known provider of MEMS-based solid-state automotive lidar technology and ADAS solutions. The stock has declined 32.6% in the trailing 12-month period.
MicroVision’s diversified portfolio is a key catalyst. It offers multiple technology nodes with the highest resolutions and the smallest form factor LiDAR with its MEMS-based long-range MAVIN and small form factor short-range sequential flash-based MOVIA LiDAR product lines.
The Zacks Consensus Estimate for MVIS’ 2025 loss has been pegged at 41 cents per share. MicroVision currently has a Zacks Rank #3.
Price & Consensus: MVIS
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3 Laser Systems Stocks to Watch From a Prospering Industry
The Zacks Laser Systems and Components industry participants, such as Lumentum (LITE - Free Report) , IPG Photonics (IPGP - Free Report) and MicroVision (MVIS - Free Report) , benefit from upbeat demand from electric vehicles, electronics, semiconductors and healthcare end-markets. Robust demand for high-power continuous wave and pulsed laser for cutting and battery-processing applications, growing demand for high-performance optical devices, and the ongoing proliferation of Generative AI (GenAI), cloud computing, autonomous driving, IoT and 5G are the key catalysts. However, industry participants are suffering from challenging macroeconomic conditions globally, weak economic conditions in Europe and a sluggish economic environment in China. Continued economic uncertainty with low PMI numbers in Europe, North America and Japan is impacting industrial demand and capital investments.
Industry Description
The Zacks Laser Systems and Components industry comprises companies offering high-performance fiber lasers, fiber amplifiers and diode lasers, optical and photonic products, and scanning technology solutions. The key end markets are semiconductors, metrology, advanced communication and medical devices. Industry participants also provide high-precision 3D sensors and system products for inspection and metrology. Moreover, in the medical devices space, laser and other energy-based aesthetic treatments can achieve therapeutic results by affecting structures within the skin. Developing safe and effective aesthetic treatments has resulted in a well-established market for these procedures. The industry also operates in the cyclical surface mount technology and semiconductor capital equipment markets.
3 Laser Systems & Components Industry Trends to Watch
Emerging Applications Driving Demand for Lasers: The industry is benefiting from increasing demand for emerging applications like additive manufacturing, facial recognition, gesture recognition, LiDAR applications and IoT. Advanced lasers, especially those with 3D sensing (3DS) capabilities, are enhancing interactions using technology. Notably, 3DS — the technology that allows users to create 3D printable objects, control games with body gestures and measure objects — is in high demand.
Laser-IoT Combination Supports Efficiency: As industries are increasingly adopting automation techniques, combining lasers with IoT improves operating efficiency. IoT-supported manufacturing equipment is far easier to update with firmware. The combination reduces costs and increases flexibility and reliability manifold by enabling material-handling capabilities through remote sources. Strong demand from semiconductor and allied markets, which are seeing a rapid shift toward the production of micro and nano devices, is another positive for industry participants.
Challenging Macroeconomic Condition Hurts Prospect: Industry participants suffer from sluggish capital spending by original equipment manufacturers. Moreover, persistent inflation, energy headwinds in Europe and weakness in China are expected to hurt industry participants in the near term.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Laser Systems and Components industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #91, which places it in the top 36% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Given the bright industry outlook, there are a number of stocks worth watching in the industry. But before we present the top industry picks, it is worth looking at the industry’s shareholder returns and current valuation first.
Industry Underperforms Broader Sector and S&P 500
The Zacks Laser Systems and Components industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500 composite over the past year.
The industry has appreciated 9.3% over this period compared with the S&P 500’s return of 25.3% and the broader sector’s growth of 27%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month P/S, which is a commonly used multiple for valuing Laser Systems and Components stocks, we see that the industry is currently trading at 10.03X compared with the S&P 500’s 5.79X. It is also trading above the sector’s trailing 12-month P/S of 8.01X.
Over the last five years, the industry has traded as high as 12.64X and as low as 4.26X, with a median of 6.79X, as the charts below show.
Trailing 12-Month Price-to-Sales (P/S) Ratio
3 Laser Stocks to Watch
Lumentum: This Zacks Rank #3 (Hold) company is positioned at the forefront of high-performance computing solutions due to its accomplishments in the hyperscaler market. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
LITE's experience in this field may lead to new opportunities as cloud computing and data centers continue to develop and require ever-increasing speeds and capacities.
The company secured a second win in the 800G hyperscaler market, suggesting potential for growth in this high-performance computing segment. Clients are already incorporating its 200G EMLs into their upcoming transceivers, which puts it in a strong position for the impending switch to 200G per lane.
LITE shares have jumped 84.9% in the trailing 12-month period. The Zacks Consensus Estimate for the company’s fiscal 2025 earnings has increased by a penny to $1.68 per share over the past 30 days and indicates 66.34% growth over the fiscal 2024 figure.
Price & Consensus: LITE
IPG Photonics: This Oxford, MA-based company is suffering from weakness in general manufacturing and e-mobility.
IPG Photonics’ success in the EV battery manufacturing sector, supported by advanced laser welding solutions and strategic partnerships with companies like Miller Electric for handheld welding solutions, is expected to drive top-line growth.
IPGP shares have lost 21.3% in the trailing 12-month period. The Zacks Consensus Estimate for this Zacks Rank #3 company’s 2025 earnings has been unchanged at $1.95 per share over the past 30 days and indicates 29.14% growth over 2024’s estimated figure of $1.51 per share.
Price & Consensus: IPGP
MicroVision: Redmond, WA-based MicroVision is a well-known provider of MEMS-based solid-state automotive lidar technology and ADAS solutions. The stock has declined 32.6% in the trailing 12-month period.
MicroVision’s diversified portfolio is a key catalyst. It offers multiple technology nodes with the highest resolutions and the smallest form factor LiDAR with its MEMS-based long-range MAVIN and small form factor short-range sequential flash-based MOVIA LiDAR product lines.
The Zacks Consensus Estimate for MVIS’ 2025 loss has been pegged at 41 cents per share. MicroVision currently has a Zacks Rank #3.
Price & Consensus: MVIS