Illumina (ILMN -2.02%) just lit up a lot of biotech portfolios. Thanks to record-breaking shipments of gene-sequencing instruments, total quarterly revenue surged 28% to $539 million.. Despite facing currency headwinds, the company handily beat the $524.45 million analyst consensus for revenue. The giant of next-generation sequencing technology also upgraded its outlook: It now expects full-year earnings per share of $3.36 to $3.42, up from the previous range of $3.12 to $3.18.

Wall Street liked what it saw, and the stock gained 3% after hours.

Headquartered in San Diego, Calif., Illumina specializes in using sequencing technologies to analyze genetic variation. Genetics-based medicine has taken off in the last couple years, as consumers and physicians are now using these technologies to forecast and avoid future diseases, including cancer.

For example, last year, Angelina Jolie wrote a commentary about her preventive mastectomy and how Illumina's gene testing method allowed her to determine her risk of getting breast and ovarian cancer. One thing the actress didn't mention about her use of genetics-based medicine was the cost, but it is much less than you might expect. Last year, Illumina reduced the cost of DNA sequencing by a factor of 10 when it unveiled the HiSeq X Ten. The machine was the first DNA-crunching supercomputer and is able to sequence an entire genome for $1,000.  

Let me stress how incredible that figure is: That's a step-function cost drop. A year before that, the cost for that sequencing was $10,000. A decade ago? $1 billion.

Big results, bigger promise
As Motley Fool analyst Keith Speights pointed out in a recent analysis of Illumina, the company's first-quarter revenue would have looked even better if not for currency fluctuations. On a constant currency basis, revenue was up 33% year over year.

Illumina also projected its revenue to grow 20% in 2015, which is right in line with expectations for the industry. Tests for a person's genetic disposition, which can predict disease risk and monitor therapeutic response, are the wave of the future, and the market is expected to grow by 20.4% globally by 2020.  

The company delivered $67 million in first-quarter cash flow from operations, with free cash flow of $30 million. Research and development costs rose 19% year over year to $91.8 million. The company also said it repurchased $35 million of common stock since its last earnings release.

Revolutionary change in disease diagnostics
During the earnings call, management highlighted recent launches of key new products. While the HiSeq X Ten is a milestone the company won't soon surpass, the company last month announced its TruSight HLA, an instrument designed to end the need for multiple rounds of testing to resolve ambiguous results. The HLA region of the genome plays a critical role in autoimmune disorders, transplant rejection, drug sensitivity, and cancer, making this device applicable to multiple markets.

Another next-generation device launched last quarter is the NeoPrep, which Illumina acquired by purchasing Advanced Liquid Logic. The lab device provides a one-stop solution for NGS library prep.

Some of cancer therapy's most promising recent efforts lie in finding a way to personalize treatment and develop a single test for treatment guidance. In pursuit of this, Illumina has collaborated with Johnson & JohnsonAstraZeneca, and Sanofi.The goal is to find a universal means of testing that would allow doctors to pick drugs aimed at the specific molecular machinery of an individual's tumor.

Illumina's strong foothold in this multibillion-dollar gene sequencing market was further strengthened with its partnership with Merck this quarter. Merck will now join the group using Illumina's NGS-based diagnostics to create a multigene panel for therapeutic selection of targeted cancer therapies.

Recent biotech earnings are hot, so fasten your seatbelt
While Illumina by itself doesn't pack enough of a wallop to drive the industry to new heights, Amgen (AMGN 0.78%) also came in after Tuesday's close with strong numbers that crushed analysts' previous estimates.

With both large-cap biotechs surpassing estimates, might this be the beginning of a chain reaction that could ignite further investor interest and raise share prices for the sector? It's anyone's guess, but good news from both Illumina and Amgen could be good for the whole sector.

On the downside, Illumina is no bargain, sporting a trailing P/E ratio of 81.5. When you compare that to the life sciences tools and services industry average trailing 12-months earnings multiple of 37.12, Illumina is in the 91st percentile, according to Compustat. But Illumina's trailing P/E adheres closely to its five-year historical average P/E of 80.1.

Biotech stocks are in a go-go run the likes of which we haven't seen since the late 1990s. But while stocks soar, bubble talk percolates. Will biotechs soon reverse course and take a big drop? Looking at Illumina's and Amgen's impressive earnings, I'm not holding my breath.