Top Quant Stock Pick This Week – May 28, 2026
2nd weekly pick is revealed
Selection for this week
Some Pros about the stock
Some Cons about the stock
Criteria for choosing
The previous selections
The selection last week, SNDK (Sandisk), has risen 14% since it was added to the Portfolio. A nice start for this Portfolio.
Add: LITE (Lumentum Holdings) – Communication Equipment
What does the company do?
Lumentum Holdings develops optical and photonic products for AI infrastructure, cloud data centers, networking, semiconductors, and industrial manufacturing markets. Its technologies include optical chips, lasers, transceivers, and photonic components used in high-speed networking, semiconductor production, EV battery manufacturing, and advanced industrial applications. Founded in 2015 in California.
Why Some Investors Are Bullish
Strong AI infrastructure demand
Lumentum is benefiting directly from growing AI data-center spending and high-speed optical networking demand from hyperscalers and cloud providers.
Improving revenue and margins
The company has recently delivered strong revenue growth alongside improving profitability driven by better utilization and a stronger AI-focused product mix.
Critical role in optical networking
Lumentum’s laser and optical technologies are increasingly important as AI workloads require faster data transmission and higher-bandwidth interconnect infrastructure.
Potential multi-year hyperscaler growth cycle
Current demand is being driven more by large cloud and AI infrastructure buildouts than traditional telecom spending cycles, potentially creating a longer-duration opportunity.
Positive long-term industry outlook
Wall Street remains generally constructive on Lumentum’s long-term positioning within AI infrastructure, optical networking, and advanced photonics.
What Bears Are Worried About
Valuation expectations have risen significantly
The stock has rallied sharply alongside AI enthusiasm, leaving less room for operational disappointments if growth slows.
Customer concentration risk
A relatively small number of hyperscale customers account for a significant portion of revenue, increasing dependency on large cloud-spending trends.
Supply-chain and capital spending pressures
Strong demand has created manufacturing constraints, while expanding production capacity requires substantial investment that may pressure near-term free cash flow.
Bottom Line
Lumentum appears well positioned to benefit from the continued expansion of AI infrastructure and optical networking demand, particularly in high-speed data-center connectivity. The long-term growth opportunity looks strong, but investors still need to weigh elevated expectations, customer concentration, supply constraints, and the capital-intensive nature of scaling advanced optical manufacturing capacity.
Top Quant Stock of the Week Criteria
Over the next few weeks, I will be detailing all the criteria I will use.
So far:
I am using a Quantitative research platform that provides a daily list of top-ranked stocks to buy or sell, based on a Comprehensive Quant Score. This Quant system uses computer algorithms to come up with its rankings. This score incorporates multiple factors, including valuation, growth, profitability, momentum, and EPS revisions.
I will be giving heavy weight to strong momentum and strong EPS revisions to make the weekly selection. Then, I will use my tested proprietary criteria to sort and then break any tie.
Additional Criteria:
One stock will be selected each week. That would make 52 selections a year if I don’t miss any weeks because of internet problems.
The hold times for the stocks added will be 1 week to years. Although a 1 week hold would be rare, it could happen if the stocks Quant metrics took a big nose dive right after being selected. If an added stock maintains its good metrics, it will be kept in the portfolio until it doesn’t. No time limit. The Quant system will tell me when it is time to let it go. So the hold time is short, medium and long depending on the Quant system metrics.
More color on the criteria next week.
Previous Selections:
Fingers crossed on this new selection. I'll following this new portfolio closely. Thanks for doing this.
For a look at the live scorecard for Position Trader, see the google doc link below.
It has the Live performance numbers and some links back to more information about the three Quant stock Model Portfolio's.
https://live-scorecard.position-trader.com/