A new AI-based stock has outperformed market leader Nvidia by generating 132% returns year-to-date. The stock is none other than Lumentum Holdings (NASDAQ: LITE), which supplies photonics, transceivers, and lasers for AI data centers. The company is a service provider that the AI industry now depends on for building its robust infrastructure.

While Nvidia stock and other leading tech titans have cooled down in value, AI service firms are rallying. An investment of $1,000 in Lumentum Holdings stock at the start of January has turned into $2,320 in April. That’s phenomenal returns in less than 100 days of investment. Not every equity is capable of delivering this much return in a short period.

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Why Lumentum Holdings Stock Outperformed Market Leader Nvidia

While market commentators say that Nvidia stock has peaked, AI service-based firms are driving the upward push. The rise in Lumentum Holdings stock comes after Nvidia noticed its importance and invested $2 billion to purchase its ultra-high-power lasers and capacity rights for the next-gen optical interconnects.

Nvidia’s strategic investment in Lumentum Holdings is among the catalysts for the stock to soar this year. The deal funded the AI-based company to set up a new manufacturing plant in Greensboro, North Carolina. This will boost its manufacturing capacity, delivering advanced laser components and optical networking products to data centers. LITE’s rise reflects a broader market confidence where AI-based firms, such as Vertiv and SanDisk, are receiving bigger investments.

In addition, Lumentum Holdings received further support as the stock saw an inclusion in the S&P 500 index on March 23. This triggered further buying from retail investors as the potential for the equity is huge. After the S&P 500 index inclusion, trading volumes in LITE were up by over 40%. The increased capital funding from Nvidia gave Lumentum Holdings stock the much-needed momentum.