In a large bowl, combine the milk, eggs and sugar. Stir in bread cubes; let stand for 5 minutes, stirring occasionally. Pour into a greased 1-1/2-qt. baking dish. Sprinkle with chocolate chips and cinnamon. Bake at 350° for 55-60 minutes or until a knife inserted in the center comes out clean.
For sauce, combine the sugar, butter, water and lemon juice in a saucepan. Whisk in egg yolk. Bring to a boil over medium heat, stirring constantly. Cook and stir for 1 minute. Remove from the heat; stir in lemon zest. Serve over pudding.