Key Highlights

• nLIGHT shares plunged approximately 25.56 percent to $56.16, a decline of $19.29 from a prior close of $75.44, as investors extended the after-hours selloff that began Wednesday.

• Despite record second quarter revenue of $82.6 million, up 34 percent year over year, and a Q2 EPS beat of $0.15 versus $0.10 estimated, the market is fixated on soft third quarter guidance and disclosed supply chain disruption that will delay revenue recognition into future quarters.

• Adding to the decline, one research firm downgraded the stock from Strong Buy to Hold, and several other analysts including Needham, Craig-Hallum, and Stifel trimmed price targets between $85 and $95 following the report.

• The stock's decline comes amid broader semiconductor sector volatility, with peers like SanDisk and Western Digital also selling off this week despite beating estimates, suggesting elevated growth expectations across the group.

Guidance Concerns Overshadow Record Revenue

nLIGHT, Inc. (NASDAQ:LASR) shares closed down 25.56 percent at $56.16, extending a post-earnings selloff that began after Wednesday's after-hours Q2 report. Despite the company reporting record revenue of $82.6 million, up 34 percent year over year, driven by record product revenue of $59 million (up 45 percent), and adjusted EBITDA of $10.7 million with operating cash flow of $20.7 million, the market is fixated on soft third quarter guidance and a disclosed supply chain disruption that will delay significant impact into coming quarters.

Supply chain challenges emerged with certain Chinese sources of optics components, impacting primarily commercial products; this is expected to reduce third quarter revenue by approximately $17 million, with resolution timed uncertain in months to quarters, and fourth quarter impact still a question mark, though the LWJS initial funding lot is expected to be largely unaffected.

Analyst Downgrades and Sector-Wide Selloff

Adding to the decline, one research firm downgraded the stock from Strong Buy to Hold, and Needham, Craig-Hallum, and Stifel trimmed price targets between $85 and $95, citing long-term contract growth potential in defense weapon systems, including a record $44 million Joint Laser Weapon System award, being offset by near-term supply chain uncertainty.

The stock's decline comes amid broader semiconductor sector volatility, with peers including SanDisk and Western Digital also selling off this week despite beating estimates, suggesting elevated growth expectations across the group that leave little room for guidance disappointments, even when accompanied by record top-line results.

What Investors May Watch Next

Market participants are likely to watch how quickly the Chinese optics supply chain disruption resolves, given the timeline uncertainty of months to quarters cited by the company. Third quarter guidance calls for revenue between $63 to $73 million (midpoint $68 million), including a $13 million development revenue headwind, with gross margin guided between 24 to 30 percent, down from 34 to 40 percent previously.

Continued momentum in the Joint Laser Weapon System contract and broader aerospace and defense R&D revenue, up 41 percent year over year to $5.7 million, alongside directed-energy, laser sensing, and munitions restocking demand, may also be factors investors weigh against the near-term supply chain overhang.

Conclusion

In summary, nLIGHT (NASDAQ:LASR) shares fell approximately 25.56 percent to $56.16 at last closing, as soft third quarter guidance and a disclosed supply chain disruption outweighed record second quarter revenue and an EPS beat. These are the verified facts from the earnings release and market data. Whether the decline proves temporary may depend on how quickly the disclosed supply chain issues resolve and whether defense contract momentum offsets near-term commercial headwinds.