Key Takeaways COHR's AI infrastructure focus drives 41% YoY growth in its data center segment.Multi-year cloud commitments transition COHR away from traditional hardware cycles.COHR outperforms peers like LITE and FN with strong demand and growth visibility. Coherent’s (COHR - Free Report) transformation is increasingly being driven by the rapid expansion of AI infrastructure, positioning the company as a key supplier to one of the fastest-growing segments of the technology industry. As hyperscale cloud providers and enterprises continue investing heavily in AI computing, demand for high-speed optical connectivity has accelerated, strengthening Coherent’s role within next-generation data center networks.
The company's Datacenter & Communications segment has emerged as its primary growth engine, contributing 75% of third-quarter fiscal 2026 revenues while delivering impressive 41% year-over-year growth. This reflects the growing importance of optical transceivers, networking components, and photonic technologies that enable AI clusters to transfer massive volumes of data with low latency and high efficiency.
More importantly, this shift is changing the nature of Coherent’s business. Hardware manufacturers have traditionally faced cyclical demand, fluctuating orders and short product lifecycles that often resulted in uneven financial performance. Coherent is increasingly benefiting from a different dynamic. Its products are becoming integral to long-term AI infrastructure projects, where investments are supported by multi-year cloud expansion plans rather than short-term replacement cycles.
This transition provides greater visibility into future demand and improves the quality of the company’s revenue base. As AI deployments continue scaling, customers are making longer-term commitments to critical networking infrastructure, reducing the uncertainty typically associated with hardware businesses.
With AI infrastructure spending expected to remain a strategic priority for cloud providers and enterprise customers, Coherent appears well positioned to benefit from sustained demand. Its growing exposure to this structural trend could support more durable revenue growth while strengthening its long-term investment appeal.
Coherent Continues to Outperform Key Peers
Compared with optical networking peers Lumentum (LITE - Free Report) and Fabrinet (FN - Free Report) , Coherent continues to benefit from stronger exposure to AI infrastructure investments and increasing demand for high-speed optical connectivity. While LITE and FN are well-positioned to capitalize on data center upgrades, Coherent has strengthened its competitive standing through manufacturing expansion, long-term customer commitments, and improved backlog visibility.
The company is also demonstrating an ability to translate robust demand into profitable growth while maintaining confidence in future expansion. As AI infrastructure spending continues to accelerate, Lumentum, Fabrinet and Coherent are all expected to benefit. However, Coherent currently combines superior growth visibility, expanding production capacity and a more attractive post-correction valuation, making it stand out among its optical networking peers.
COHR’s Price Performance, Valuation and Estimates
The stock has surged a massive 70% year to date against the industry’s 7% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, COHR trades at a forward price-to-earnings ratio of 35.93X, well above the industry’s 21.2X. It carries a Value Score of C.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for the company’s fiscal 2026 earnings has declined over the past 60 days.
COHR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Americké akciové trhy rostou díky naději na obnovení rozhovorů mezi USA a Íránem a zmírnění napětí na Blízkém východě.
Širší index S&P 500 posiluje o 0,41 % na 7438,47 bodu a index Dow Jones si připisuje 0,56 % na 52002,68 bodu. Technologie však mírně zaostávají, technologický Nasdaq Composite odepisuje 0,07 % na 25120,91 bodu. Pozitivní náladu na trhu podporuje také úspěšný start výsledkové sezóny, v níž většina firem překonává očekávání ziskovosti.
V rámci jednotlivých odvětví indexu S&P 500 vykazují nejsilnější růst reality o 2,6 %, následované základními materiály s nárůstem o 1,2 % a nezbytnou spotřebou, která si připisuje 0,8 %. Na druhé straně zaznamenávají jen mírné zisky zbytná spotřeba, informační technologie i utility, které shodně přidávají 0,1 %.
Mezi nejsilnější individuální akcie se řadí Digital Realty Trust (DLR) s prudkým růstem o 14 %. Výrazně posiluje také SLB (SLB) o 10 %, Smurfit Westrock (SW) o 7,9 %, Equinix (EQIX) o 6,3 % a International Paper (IP), která si připisuje 6,2 %. Na opačné straně trhu po výprodejích v technologickém a dodavatelském sektoru klesá Coherent Corp (COHR) o 7,8 %. Nedaří se ani firmám Sandisk Corp (SNDK) a CH Robinson Worldwide (CHRW), které shodně odepisují 7,5 %, Lumentum Holdings (LITE) s poklesem o 6,9 % a Robinhood Markets (HOOD), jež oslabuje o 6,1 %.
Zprávy o možném uklidnění situace na Blízkém východě tlačí dolů ceny energií. Severoamerická lehká ropa WTI klesá o 4,2 % na 88,31 dolaru za barel. Spotové zlato naopak mírně posiluje o 0,4 % na 4064,95 dolaru za unci. Americký dolar vykazuje stabilní vývoj, když k euru zůstává téměř bez změny na 1,1379 dolaru, britská libra mírně roste o 0,1 % na 1,3333 dolaru a japonský jen drží úroveň 163,76 jenu za dolar. Pokles cen ropy zmírňuje obavy z inflace, což vede ke poklesu výnosů desetiletých amerických vládních dluhopisů o tři bazické body na 4,66 %. Bitcoin reaguje na celkový vývoj poklesem o 1,9 % na 63850,84 dolaru.
Index Dow Jones +0,56 % na 52002,68 b.
S&P 500 +0,41 % na 7438,47 b.
Nasdaq Composite -0,07 % na 25120,91 b.
Index S&P 500 +0,41 % na 7438,47 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Reality +2,6 % Zbytná spotřeba +0,1 % Základní materiály +1,2 % Informační technologie +0,1 % Nezbytná spotřeba +0,8 % Utility +0,1 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Digital Realty Trust (DLR) +14 % Coherent Corp (COHR) -7,8 % SLB (SLB) +10 % Sandisk Corp (SNDK) -7,5 % Smurfit Westrock (SW) +7,9 % CH Robinson Worldwide (CHRW) -7,5 % Equinix (EQIX) +6,3 % Lumentum Holdings (LITE) -6,9 % International Paper (IP) +6,2 % Robinhood Markets (HOOD) -6,1 %
Daniel Marván, Fio banka, a.s.
SAXONBURG, Pa., July 22, 2026 (GLOBE NEWSWIRE) -- Coherent Corp. (NYSE: COHR) (“Coherent,” “We,” or the “Company”), a global leader in photonics, announced today that it will release its financial results for the quarter ended June 30, 2026, on Wednesday, August 12, after the New York Stock Exchange closes. The release will be followed by a live audio webcast at 4:30 p.m. ET to discuss the results.
The Company invites investors to join the live audio webcast at coherent.com/company/ investor-relations/financial-webcasts. The webcast will be recorded and a replay will be available within 24 hours after the live audio webcast on the company’s website.
About Coherent
Coherent is the global photonics leader. We harness photons to drive innovation. Industry leaders in the datacenter, communications, and industrial markets rely on Coherent’s world-leading technology to fuel their own innovation and growth.
Founded in 1971 and operating in more than 20 countries, Coherent brings the industry’s broadest, deepest technology stack; unmatched supply chain resilience; and global scale to help its customers solve their toughest technology challenges. For more information, please visit us at coherent.com.
Pozitivní nálada vydržela po celou obchodní seanci. Obrat na čipovém sektoru udržel technologický NASDAQ výrazně v plusu. Přesto klasické technologie z magnificent 7 skončily v záporu (Amazon -0,98 %). To vše se dělo při stále rostoucí cenně ropy. Investoři sledují především čísla hospodaření a geopolitika šla mírně stranou.
Z čipového sektoru se dařilo především výrobci paměťových čipů Micron +12,04 %, Sandisk +14% či výrobce procesorů Intel +8,64 %.
Automobilový koncern General Motors po zveřejněných kvartálních výsledcích přidal + 4,87 %.
Obrat zažily jak cenné kovy (zlato +1,85 %) tak kryptoměny (Bitcoin +1,61 %). Z růstu kryptoměn těžily akcie burzy Coinbase +9,67 %.
Index Dow Jones +0,74 % na 52223,93 b.
S&P 500 +0,89 % na 7509,21 b.
Nasdaq Composite +1,29 % na 25837,21 b.
Index S&P 500 +0,89 % na 7509,21 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Informační technologie +2,3 % Nezbytná spotřeba -1 % Energie +1,2 % Komunikační služby -0,8 % Zdravotní péče +0,6 % Utility +0 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Sandisk Corp (SNDK) +14 % Danaher Corp (DHR) -11 % Western Digital Corp (WDC) +13 % MSCI (MSCI) -10 % Micron Technology (MU) +12 % Tyler Technologies (TYL) -5,7 % Teradyne (TER) +12 % Halliburton (HAL) -5,5 % Coherent Corp (COHR) +11 % Gartner (IT) -4,5 %
Jan Pazourek, Fio banka, a.s.
Investors interested in Business Services stocks should always be looking to find the best-performing companies in the group. Is Coherent (COHR - Free Report) one of those stocks right now? Let's take a closer look at the stock's year-to-date performance to find out.
Coherent is a member of the Business Services sector. This group includes 247 individual stocks and currently holds a Zacks Sector Rank of #6. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individual stocks within the sector to gauge the strength of each group.
The Zacks Rank is a proven model that highlights a variety of stocks with the right characteristics to outperform the market over the next one to three months. The system emphasizes earnings estimate revisions and favors companies with improving earnings outlooks. Coherent is currently sporting a Zacks Rank of #2 (Buy).
Over the past 90 days, the Zacks Consensus Estimate for COHR's full-year earnings has moved 15.2% higher. This means that analyst sentiment is stronger and the stock's earnings outlook is improving.
Based on the most recent data, COHR has returned 54.6% so far this year. Meanwhile, the Business Services sector has returned an average of -8.8% on a year-to-date basis. This shows that Coherent is outperforming its peers so far this year.
One other Business Services stock that has outperformed the sector so far this year is Enpro (NPO - Free Report) . The stock is up 51.6% year-to-date.
For Enpro, the consensus EPS estimate for the current year has increased 3.3% over the past three months. The stock currently has a Zacks Rank #2 (Buy).
Looking more specifically, Coherent belongs to the Technology Services industry, which includes 121 individual stocks and currently sits at #99 in the Zacks Industry Rank. Stocks in this group have lost about 9.1% so far this year, so COHR is performing better this group in terms of year-to-date returns. Enpro is also part of the same industry.
Investors interested in the Business Services sector may want to keep a close eye on Coherent and Enpro as they attempt to continue their solid performance.
Much of the AI conversation centers on chips, but there is a quieter bottleneck forming inside data centers, and it is all about how those chips talk to one another. As artificial intelligence clusters swell to tens and even hundreds of thousands of processors, the humble copper wiring that has connected computers for decades is running out of room.
The fix is silicon photonics, and investment in it is ramping quickly. Two companies look especially well placed to benefit.
Image source: Getty Images.
Why copper is hitting a wall in AI clusters To train a modern AI model, thousands of chips must act like one enormous brain, constantly shuttling vast amounts of data among them. The more chips you add, the more traffic flows across the wires linking them, and that is where copper starts to break down. At the blistering signaling speeds these systems now demand, a passive copper cable can only carry a clean signal for less than a meter before it degrades. Push it further, and you have to pump in more and more electrical power just to keep the data intact, which generates heat and drives up the energy bill.
In a small server, that was never a problem. In a warehouse-sized cluster stretching across rows of racks, it becomes a hard physical ceiling that engineers now call the copper wall. When your bottleneck is measured in centimeters and watts, you cannot simply add more copper and hope for the best.
How silicon photonics breaks through Silicon photonics solves the problem by sending information as pulses of light through fiber instead of electrons through metal. Light travels farther, carries far more data, and uses less power over distance, which is exactly what a giant AI cluster needs. The cutting edge of this shift is co-packaged optics, where the optical components are built right next to the switch chip rather than plugged in at the edge of the box. That tight integration slashes the power lost in translation and packs far more bandwidth into the same space.
Copper is not disappearing, but its job is shrinking to the shortest hops inside a package, while optics take over everything from board to rack scale. The money following this transition is real. The optical interconnect market for AI data centers is expected to grow several times over this decade, and the broader optical transceiver market is projected to jump about 60% in a single year to roughly $26 billion in 2026.
The clearest beneficiaries are the companies that actually make the lasers, transceivers, and photonic components that this shift requires. Coherent (COHR +0.23%) is a global leader in the optical technology feeding AI data centers, and demand for its datacenter transceivers has surged as cloud giants build out. It has also deepened a partnership with Nvidia to pioneer next-generation silicon photonics, putting it close to the center of the build-out.
Today's Change
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Lumentum (LITE +3.77%) is the other pure-play worth watching. It supplies the lasers and optical components that power data center networking, and it has been expanding capacity to meet demand that's been outpacing supply. As roadmaps push toward lower-power optics and tighter silicon photonics integration, Lumentum sits right in the flow of that spending.
These are not sleepy blue chips. Optical component makers are cyclical and lumpy, with their fortunes closely tied to a handful of huge customers whose orders can swing hard from quarter to quarter. Both stocks have run up on AI enthusiasm, so valuations leave little room for disappointment, and competition in optics is fierce.
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The takeaway for investors The move from copper to light is not a maybe; it is a physical necessity as AI clusters keep growing, and silicon photonics is how the industry gets there. Coherent and Lumentum are two focused ways to invest in that transition. I would treat them as higher-risk, higher-reward plays on a durable trend, sizing positions with the optical business's volatility firmly in mind.
The Technology Services industry is expected to reach the pre-pandemic levels eventually, enabling regular dividend payments. The rising adoption of remote work, swift global digital transition and technological advancements like 5G, blockchain, artificial intelligence (AI) and machine learning (ML) will propel industry expansion. Also, concerns about data security will provide an impetus for the industry to grow.
Dave Inc. (DAVE - Free Report) , V2X Inc. (VVX - Free Report) and Coherent Corp. (COHR - Free Report) , are poised to gain from the prevailing trends.
About the Industry The Zacks Technology Services industry encompasses companies involved in producing, developing and designing various software support, data processing, computing hardware and communications equipment. These offerings range from integrated powertrain technologies, advanced analytics, technology solutions and contract research services to semiconductor packaging and interconnect technologies, collaboration software, specialty printers, and data acquisition and analysis systems. This industry caters to consumer and business markets, and serves diverse end markets and customer segments. Additionally, some industry players offer advanced analytics, clinical research services, data storage technology and solutions, and technology-enabled financial services for consumers and small business owners.
Factors Structuring the Future of Technology Services Rising Demand Environment: The industry is mature, with the demand for services remaining healthy over time. Revenues and cash flows are expected to eventually reach the pre-pandemic levels, aiding most industry players to pay out stable dividends.
Economic Recovery: According to the Bureau of Economic Analysis, GDP rose at an annual rate of 2.1% in the first quarter of 2026 compared with 0.5% in the fourth quarter of 2025. The growth rate has increased, leading to a velocity with which the economy is moving that is still forward. Economic activities in the non-manufacturing sector are in good shape. The Services PMI measured by the Institute for Supply Management has stayed above the 50% mark for 24 months.
Technological Advancement Takes Center Stage: The global shift toward digitization creates opportunities in various markets, including 5G, blockchain and AI. The United States, a significant player in the IT sector, is positioned for growth on the widespread adoption of smart technologies and increased investments in security. Companies are increasingly adopting generative AI, ML, blockchain and data science to gain a competitive advantage. Per Statista, the GenAI market is anticipated to reach $804.3 billion by 2032, witnessing a 12.6% CAGR from 2026 to 2032.
Zacks Industry Rank Indicates Bright Near-Term Prospects The Zacks Technology Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #97. This rank places it in the top 39% of 247 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and current valuation.
Industry Beats Sector But Lags S&P 500 The Zacks Technology Services industry has outperformed the broader Zacks Business Services sector but underperformed the Zacks S&P 500 composite over the past year.
The industry has moved up 5.8% over this period against the 16.7% decline of the broader sector and compared with the 25.4% rally of the Zacks S&P 500 composite.
1-Year Price Performance
Industry's Current Valuation On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing staffing stocks because of their high debt levels, the industry is currently trading at 17.73X compared with the S&P 500’s 18.68X and the sector’s 10.18X.
Over the past five years, the industry has traded as high as 28.97X and as low as 10.26X, with the median being 13.93X, as the charts below show.
EV-to-EBITDA
3 Technology Services Poised for Growth Dave: This financial technology company offers digital banking, budgeting tools and credit facilities like ExtraCash. Dave’s first-quarter 2026 earnings release reveals positive momentum in its revenues that gained 47% year over year, with adjusted EBITDA rising 57%, resulting in a 44% margin.
DAVE’s customer-first strategy bears fruit as the new member count went up 22% year over year in the first quarter of 2026, with customer acquisition costs of $18, flat with the preceding quarter. The company strengthened its relationship with customers as monthly transacting members (MTM) increased 18% year over year, with average revenue per use (ARPU) moving up 24%.
Despite an upsurge in MTM, which could raise credit risks, Dave gracefully managed to mitigate the threat, leveraging its proprietary AI and machine learning-based CashAI v5.5 model. This credit risk management apparatus led to the lowest loss rate on record in first-quarter 2026, lowering the 28-day past-due metric to 1.69%. Dave introduced Dave Flex, a “Pay in 4” credit product, to a small testing group of existing members. The company deduced the following results that include exponential growth in total originations per customer and an anticipated rise in ARPU.
The company remains on track to transition ExtraCash receivables to an off-balance sheet funding structure with Coastal Community Bank, which is expected to unlock $200 million in incremental liquidity, reduce costs of capital and support the repayment of the existing credit facility.
DAVE currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2026 EPS has moved up 14.1% in the past 90 days. Daveshares have surged 114.8% over the past year.
You can see the complete list of today’s Zacks #1 Rank stocks here.
V2X: This company offers critical mission solutions and support services to defense clients globally. VVX reported an outstanding performance in the first quarter of 2026 during its earnings release. The top line gained 23% year over year, with adjusted net income accelerating 53%, leading to bottom-line growth of 55%.
V2X’s total backlog reached a record $13.8 billion, providing strong visibility into long-term revenues, with 94% of the top line in 2026 already visible in the backlog and under contract. Across all businesses, the company held $4.1 billion in total bookings and awards.
The company’s contract execution was impressive, as evidenced by the full operational execution and initial operational capability on the large-scale T-6 aircraft program during the first quarter of 2026. It led management to expect revenues of $175-$180 million from this program. V2X managed to provide a $70-$80-million boost to the mid-point of the top-line guidance on the back of a discrete time-and-materials contract with a national security customer expansion and extension.
V2X is no less on the AI front, launching three internal AI platforms operating on enterprise IT infrastructure. It has resulted in a significant expansion in AI-enabled productivity and operational efficiency in support functions. Partnerships with Google, NVIDIA, Amazon and Tactile assisted the company in building differentiated, AI-backed predictive platforms for aerospace sustainment and client bids.
VVX presently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its 2026 bottom line increased 4.4% in the past 90 days. V2X shares have gained 59.1% in a year.
Coherent: This prominent player in the materials, networking and lasers domain is riding the AI wave. The rapid expansion of AI data centers and the rising demand for bandwidth and energy efficiency are fueling the expansion in optical networking infrastructure. It has led to a step-function increase in its order book, resulting in a record level of backlog.
The upsurge in Coherent’s transceiver demand can be attributed to the rapid adoption of 800-gig and 1.6T transceivers by customers. On the Optical Circuit Switch front, the market opportunity exceeds $4 billion. The company resolved a critical manufacturing bottleneck, enabling output to increase rapidly across two production facilities and convert backlog into top-line growth.
Coherent’s partnership with NVIDIA is instrumental to raising Co-Packaged Optics’ (CPO) addressable market opportunity over $15 billion. The company anticipates initial scaled-out CPO revenues in late 2026, followed by scaled-out CPO revenues in late 2027.
Supply-chain headwinds are prevalent within the AI market. To address this concern, COHR expanded internal Indium Phosphide (InP) capacity. The shift from 3-inch InP to 6-inch yields more than 4X as many devices at less than half the cost. The company’s strategy to sign and finalize long-term agreements with customers, including upfront capital investments from customers, helps fund and mitigate challenges encircling COHR’s capacity expansion.
COHR currently flaunts a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its fiscal 2026 bottom line has increased 1.5% in the past 90 days. Coherent shares have skyrocketed 198.5% in a year.
Key Takeaways COHR raised its outlook and highlighted record backlog visibility extending through 2028.COHR expects fiscal 2027 growth to outpace fiscal 2026 while ramping its 6-inch indium phosphide platform.COHR continues to outperform key optical networking peers with stronger AI infrastructure exposure. Coherent (COHR - Free Report) appears to offer a more compelling investment opportunity following its recent post-earnings correction. The stock retreated despite the company delivering a strong quarterly performance, raising its outlook and highlighting record backlog visibility extending through 2028.
Management also reaffirmed that fiscal 2027 growth is expected to exceed fiscal 2026 levels while continuing to ramp production of its 6-inch indium phosphide platform, a critical technology supporting next-generation AI networking. The sharp decline came after an extraordinary rally rather than any deterioration in business fundamentals, reflecting a reset in investor expectations. COHR remains up an impressive 218% over the past year, even after declining 19% over the past month.
Image Source: Zacks Investment Research
Although the stock trades at a forward 12-month price-to-earnings ratio of 36.29X, above the industry average of 20.89X, the recent correction has made the valuation more reasonable relative to its long-term growth prospects.
Image Source: Zacks Investment Research
Supporting this view, the Zacks Consensus Estimate for 2026 earnings is pegged at $5.47, indicating 55% year over year growth. The consensus mark for 2026 revenues stands at 7.06 billion, suggesting 21.5% year over year growth.
Coherent Continues to Outperform Key PeersCompared with optical networking peers Lumentum (LITE - Free Report) and Fabrinet (FN - Free Report) , Coherent continues to benefit from stronger exposure to AI infrastructure investments and increasing demand for high-speed optical connectivity. While LITE and FN are well-positioned to capitalize on data center upgrades, Coherent has strengthened its competitive standing through manufacturing expansion, long-term customer commitments and improved backlog visibility.
The company is also demonstrating an ability to translate robust demand into profitable growth while maintaining confidence in future expansion. As AI infrastructure spending continues to accelerate, Lumentum, Fabrinet and Coherent are all expected to benefit. However, Coherent currently combines superior growth visibility, expanding production capacity and a more attractive post-correction valuation, making it stand out among its optical networking peers.
COHR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SAXONBURG, Pa., July 13, 2026 (GLOBE NEWSWIRE) -- Coherent Corp. (NYSE: COHR), a global leader in photonics, has been awarded on TIME’s list of America’s Best Companies 2026. This prestigious award is presented in collaboration with Statista, the world-leading statistics portal and industry ranking provider. The award list can be viewed on TIME.com.
TIME and Statista identified America’s Best Companies 2026 based on three primary dimensions:
Employee Satisfaction – Based on survey data from ~217,000 verified employees at U.S. companies over the past three years, covering company recommendations and employer ratings across image, atmosphere, working conditions, salary, workplace, and equality.Financial Performance – Drawn from Statista's revenue database (last five years). Companies needed at least US $100 million in revenue in 2025. Performance was assessed on multiple metrics: short-term (2023–2025) and long-term (2021–2025) revenue growth (relative and absolute), changes in net income, asset growth, and the evolution of return on assets (ROA), all for 2023–2025.Sustainability Transparency – Based on an ESG index from Statista's ESG Database and additional research, covering: Environmental: 2024 carbon emissions intensity, reduction rate vs. 2022, and CDP scoreSocial: share of women on the board and existence of a human rights policyGovernance: presence of a GRI-aligned CSR report and a compliance/anti-corruption policy The 1000 highest-scoring companies were recognized as America’s Best Companies 2026.
"We're honored to be recognized by TIME as one of America's Best Companies," said Jim Anderson, Chief Executive Officer of Coherent. "This recognition reflects the dedication of our global teams, whose innovation, collaboration, and relentless focus on our customers continue to drive Coherent forward. Our people are our greatest strength, and this recognition belongs to every employee who contributes to our success."
"Our employees make Coherent what it is," said Grace Lee, Chief People Officer of Coherent. "We're committed to building an inclusive, high-performance culture where people have the opportunity to grow, innovate, and make a meaningful impact. Being recognized by TIME reinforces our commitment to creating an exceptional employee experience."
About Coherent
Coherent is the global photonics leader. We harness photons to drive innovation. Industry leaders in the datacenter, communications, and industrial markets rely on Coherent’s world-leading technology to fuel their own innovation and growth.
Founded in 1971 and operating in more than 20 countries, Coherent brings the industry’s broadest, deepest technology stack; unmatched supply chain resilience; and global scale to help its customers solve their toughest technology challenges. For more information, please visit us at coherent.com.
About Statista
Statista publishes hundreds of worldwide industry rankings and company listings with high-profile media partners. This research and analysis service is based on the success of statista.com, the leading data and business intelligence portal that provides statistics, relevant business data, and various market and consumer studies and surveys.
Nvidia (NASDAQ:NVDA | NVDA Price Prediction), along with the broader semi scene, is bouncing back again. It’s right back in the $5 trillion club again, but whether the GPU giant is ready to make a run for new highs remains the $6 trillion question. Indeed, it feels too early in the AI race to call a peak in the “picks and shovels” plays, especially with more huge earnings results up ahead.
As Nvidia collides with greater competition, with hyperscalers looking to innovate on custom silicon while hoping to take some of the heat away from GPUs, I do think that the firms Nvidia set its sights on are becoming increasingly exciting areas to put new money to work.
Will the AI race be won at the speed of light? While other investors look for the “next Nvidia” or “next DRAM” for a shot at quick, outsized gains, I think it pays more attention to look at what Nvidia’s top boss, Jensen Huang, is investing in. Of course, Nvidia has made so many deals in the past year, and as circular (or dismissible if you’re an AI skeptic who thinks semis are in a bubble) as they might seem, I do think that it’s hard to bet against the firms that Jensen Huang has been betting on.
Indeed, the optical connectivity plays may very well represent the next major chokepoint of the AI revolution. Arguably, it already is, as firms look to move into photonics, leaving copper and the so-called “copper wall” behind.
In my view, the “copper wall” might be one of the bigger hurdles that gets in the way of the top racers sprinting down that AI racetrack. And it’s the firms that are able to get aboard the leap faster than the rest of the pack that I think will gain a considerable edge in that road to superintelligence, where the second or third place finishers might not be all too happy with the returns on investment.
The Big Three optical connectivity darlings In any case, Coherent (NASDAQ:COHR), Lumentum (NADSAQ:LITE), and Corning (NYSE:GLW) have really picked up traction in recent years, but with the latest pullback in the names, I think there could be an opportunity for dip-buyers to consider nibbling into a position now that some of the froth has been taken right off the top.
Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now.
On the surface, each name still looks wildly expensive, even after the latest plunge into a bear market. Despite the recent market jitters, Wall Street pros still seem to be pounding the table.
With Street-high targets of $465 on Coherent (44% gain from here), $1,300 on Lumentum (62% gain), and $270 on Corning shares (42% gain), it’s clear that analysts aren’t all too rattled by the market’s recent action.
The wind remains at the back of these optical connectivity plays, and as long as AI demand stays robust while buildouts keep moving forward, Nvidia’s big optical connectivity bets might be significant winning bets that, once again, Jensen Huang’s firm spotted early in the game.
Of course, time will tell how the Nvidia-backed darlings fare, especially once rates increase, but, for the most part, I wouldn’t want to bet against the rise of the photonics plays. Whether you choose to bet on the glass fiber with Corning, optical transceivers with Coherent, or optical switches with Lumentum, I do think that each firm could keep rising in the market cap ranks from here, even with the latest setback.
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Key Takeaways Coherent expanded its adjusted operating margin by 163 basis points in the third quarter from a year ago.COHR's higher factory utilization and supply chain efficiencies boosted profitability as production increased.Coherent's adjusted net income rose nearly 56% year over year, reflecting stronger operating leverage. Coherent Corp.'s (COHR - Free Report) improving profitability is emerging as one of the company's most encouraging trends, reflecting the financial benefits of the ongoing AI infrastructure boom.
During the third quarter, Coherent expanded its adjusted operating margin by 163 basis points from the year-ago period. While higher demand for AI-related optical networking products has fueled revenue growth, the margin improvement shows that the company is converting that demand into stronger profits.
The expansion was supported by higher factory utilization and better supply chain efficiencies. As production volumes increased, fixed manufacturing costs were spread across more units, allowing incremental revenues to flow through to earnings more efficiently.
The impact is already visible on the bottom line. Adjusted net income jumped nearly 56% year over year, highlighting the operating leverage created by rising production levels. Rather than relying solely on sales growth, Coherent is demonstrating that its manufacturing network is becoming increasingly efficient as demand strengthens.
This combination of expanding margins, improving operational efficiency and robust earnings growth suggests Coherent's financial profile is becoming stronger. If AI-driven demand remains healthy, continued improvements in manufacturing utilization and cost efficiency could support additional profit expansion in the quarters ahead, making margin performance a key metric for investors to monitor.
Peer LensAmong U.S.-listed peers, Lumentum Holdings (LITE - Free Report) and IPG Photonics (IPGP - Free Report) offer useful comparisons for investors evaluating Coherent. Like Coherent, both LITE and IPGP operate in optical components and photonics markets that benefit from increasing demand for high-speed data communications and advanced laser technologies.
However, Coherent currently stands apart because of its unusually strong exposure to AI infrastructure, a record backlog extending into 2028, long-term supply agreements through 2030 and a significantly strengthened balance sheet following NVIDIA's strategic investment. These factors have helped improve earnings visibility and differentiate Coherent's growth profile within the photonics industry.
COHR’s Price Performance, Valuation & EstimatesCoherent’s stock has rallied a whopping 249% in a year against the industry’s 10% growth.
Image Source: Zacks Investment Research
From a valuation perspective, COHR trades at a forward 12-month price-to-earnings ratio of 39.02X, higher than the industry’s 22.03X. It has a Value Score of C.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COHR’s earnings for 2026 has decreased over the past 60 days.
COHR currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Takeaways Coherent stock has soared 247% in a year but pulled back 11% over the past month.AI demand drove Datacenter & Communications to 75% of third-quarter fiscal 2026 revenues.COHR's backlog extends into 2028, while long-term supply agreements stretch through 2030. Coherent Corp. (COHR - Free Report) has been one of the standout performers in the technology hardware space over the past year. The stock has surged an impressive 247%, significantly outperforming the industry's 8% growth and the Zacks S&P 500 Composite's 24% advance. More recently, however, COHR has pulled back 11% over the past month, suggesting the stock may be entering a healthy correction after its remarkable run.
Image Source: Zacks Investment Research
The recent weakness raises an important question for investors: Is this a buying opportunity, a signal to hold existing positions, or a reason to stay on the sidelines? While the valuation remains elevated, Coherent's strengthening fundamentals indicate that the company's long-term growth story remains intact.
AI Infrastructure Demand Is Reshaping COHR’s BusinessCoherent's transformation has been fueled by booming demand for AI infrastructure. The company's Datacenter & Communications segment has become its primary growth engine, accounting for 75% of third-quarter fiscal 2026 revenues while delivering 41% year-over-year growth.
This shift is significant because it changes the company's revenue profile. Historically, hardware manufacturers have been exposed to short product cycles and volatile demand. Today, Coherent is increasingly tied to long-duration AI infrastructure spending, providing investors with greater confidence in future earnings.
Unlike traditional semiconductor hardware cycles, AI-related investments are supported by large-scale cloud deployments and multi-year capital spending plans, making demand considerably more predictable.
Long-Term Orders Improve COHR’s Revenue VisibilityOne of the biggest positives for Coherent is the dramatic improvement in order visibility.
Rather than experiencing the typical cyclical increase in hardware demand, the company is witnessing a step-change in customer commitments. Record backlog levels now extend into calendar 2028, while long-term supply agreements stretch through 2030.
This level of visibility substantially lowers the risk that new manufacturing investments become underutilized during an economic slowdown.
To support this unprecedented demand, Coherent invested approximately $290 million in capital expenditures during the third quarter of fiscal 2026, more than doubling spending from the prior-year period.
Importantly, this aggressive capacity expansion is backed by contractual customer commitments rather than speculative demand forecasts.
Operating Leverage is Beginning to Pay OffThe surge in AI-related demand is translating directly into stronger profitability.
Higher factory utilization and improved supply chain efficiencies contributed to a 163-basis-point expansion in the adjusted operating margin during the third quarter. Meanwhile, adjusted net income climbed nearly 56% year over year, highlighting the operating leverage created by rising production volumes.
As manufacturing assets become increasingly utilized, incremental revenues are flowing through to earnings at a faster pace, improving the overall quality of Coherent's financial performance.
This combination of expanding margins and stronger earnings suggests the company is benefiting not only from higher sales but also from greater operational efficiency.
Strategic Partnerships Strengthen Financial FlexibilityCoherent has also significantly strengthened its balance sheet.
A major catalyst came from NVIDIA's (NVDA - Free Report) $2 billion equity investment, which increased Coherent's cash balance to roughly $3 billion during the third quarter of fiscal 2026 from approximately $1.5 billion in the previous quarter.
Beyond the financial benefits, NVIDIA's investment serves as an important strategic validation of Coherent's technology and its role within the rapidly expanding AI infrastructure ecosystem.
Management has simultaneously accelerated debt reduction. During the quarter, Coherent repaid $162 million of debt, reducing its leverage ratio to 0.5X from 1.7X in the previous quarter.
Lower leverage, higher liquidity and declining interest costs collectively provide the company with considerably greater financial flexibility as it continues investing in future growth.
Premium Valuation Appears Supported by Improving FundamentalsCoherent currently trades at approximately 37.56 times forward earnings, nearly double the industry's 21.49 times forward earnings multiple.
Image Source: Zacks Investment Research
At first glance, that premium valuation may appear demanding. However, investors are paying for a business that is becoming fundamentally different from the cyclical hardware manufacturer it once was. Multi-year customer commitments, record backlog, expanding margins, stronger cash generation and a healthier balance sheet are all contributing to a more predictable earnings profile.
While short-term volatility is always possible following such a strong rally, Coherent's growing exposure to AI infrastructure spending and long-term customer agreements provides a solid foundation for sustained growth over the coming years.
Coherent's Top and Bottom Line Expectations Remain RobustCoherent's growth prospects remain compelling, supported by strong demand across AI-driven datacenter infrastructure and improving operating leverage. The Zacks Consensus Estimate projects fiscal 2026 revenues of $7.1 billion, indicating 21.5% year-over-year growth. Momentum is expected to accelerate further in fiscal 2027, with revenues forecast to increase 37.7% from the prior year.
The earnings outlook is equally impressive. The consensus estimate indicates fiscal 2026 EPS of $5.47, suggesting 55% year-over-year growth. Looking ahead, analysts expect EPS to climb another 52.5% in fiscal 2027, indicating confidence that Coherent's expanding AI-related business, improving margins and higher manufacturing utilization will continue to drive profitability.
Such robust top- and bottom-line projections reinforce the investment case that Coherent's transition toward AI infrastructure is creating a stronger, more predictable earnings profile despite the stock's premium valuation.
Peers to Watch: Lumentum and IPG PhotonicsAmong U.S.-listed peers, Lumentum Holdings (LITE - Free Report) and IPG Photonics (IPGP - Free Report) offer useful comparisons for investors evaluating Coherent. Like Coherent, both LITE and IPGP operate in optical components and photonics markets that benefit from increasing demand for high-speed data communications and advanced laser technologies. However, Coherent currently stands apart because of its unusually strong AI infrastructure exposure, record backlog extending into 2028, long-term supply agreements through 2030, and a significantly strengthened balance sheet following NVIDIA's strategic investment. These factors have helped improve earnings visibility and differentiate Coherent's growth profile within the photonics industry.
COHR Remains a Buy for Long-Term AI InvestorsCoherent’s remarkable rally reflects meaningful improvements in its business rather than market enthusiasm alone. The company has strengthened its revenue visibility through long-term customer commitments, expanded profitability as AI-driven demand boosts operating leverage, and reinforced its balance sheet with greater financial flexibility. Although the stock trades at a premium and could experience periodic volatility after its strong advance, its transformation into a critical supplier for AI infrastructure supports a more durable growth outlook. With robust revenue and earnings expectations, improving execution and favorable industry trends, Coherent remains an attractive buy for investors seeking long-term exposure to the expanding AI ecosystem.
COHR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SummaryThe recent AI infrastructure selloff reflected sentiment and valuation reset, while Coherent maintained record backlog visibility extending through 2028.Six-inch indium phosphide expansion strengthens Coherent's manufacturing moat as demand visibility, margins, and production capacity continue improving simultaneously.COHR is positioned across transceivers, Optical Circuit Switching, Co-Packaged Optics and thermal technologies, creating multiple overlapping long-term growth drivers.Revenue is projected to increase from $7.1 billion to $13.0 billion by FY2028 while forward EV/Sales remains well below key peers. JuSun/iStock via Getty Images
What makes me even more bullish now on Coherent (COHR) isn't another strong quarter. It's the longer-term transformation I've been watching for months. What becomes relevant is the fact that the company is slowly and
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Analyst’s Disclosure: I/we have a beneficial long position in the shares of COHR, LITE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Key Takeaways Gavin Baker is a leading AI investor who has generated major outperformance.Baker was among the first to predict the massive moves in memory stocks like Micron.Unlike the fiber-optic bubble of the late 90s, AI infrastructure is being deployed immediately. Who is Gavin Baker?Gavin Baker is the Chief Investment Officer (CIO) and Managing Partner of Atreides Management, a hedge fund with ~$7 billion in assets under management (AUM). Prior to his current role, Baker was a top-performing fund manager at Fidelity, where he earned a reputation for having a deep understanding of the complex semiconductor architecture and tech infrastructure markets.
Atreides Management is a Top Tech FundAlthough most of Wall Street has finally uncovered the AI trade, Gavin Baker was early and correct on many AI trades, including those in Astera Labs ((ALAB - Free Report) ), NVIDIA ((NVDA - Free Report) ), and Coherent ((COHR - Free Report) ). Meanwhile, Baker and Atreides also recently scored a windfall from the recent Cerebras ((CBRS - Free Report) ) IPO. Baker’s knack for finding AI stocks early has led to dramatic outperformance for Atreides over the past few years.
Image Source: Hedge Follow
Gavin Baker Recommended the Memory Trade Early Perhaps Baker’s most impressive call was on the memory trade. In late 2025, Baker’s 13F filing (required for firms with $100M or more in AUM) showed that he increased his firm’s position in memory-related names such as SK Hynix, SanDisk ((SNDK - Free Report) ), and Micron ((MU - Free Report) ). Each of these stocks has delivered triple-digit gains in 2026 thus far.
Image Source: Zacks Investment Research
Gavin Baker Reveals His Latest Thoughts on the Memory TradeLast month, Micron delivered one of the most impressive earnings reports in recent memory, producing 345% year-over-year revenue growth and blasting past Wall Street EPS expectations.
Image Source: Zacks Investment Research
Luckily for investors, Gavin Baker is one of the most transparent money managers on Wall Street and provided his latest thoughts on the memory trade in a recent “All-in Podcast” appearance. Baker provided four key reasons that the memory crunch will continue, including:
1. The Hardware Bottleneck: Baker highlighted that consumer hardware giant products like Apple ((AAPL - Free Report) ) no longer have the memory capacity required to run AI models locally. As a result, companies like Apple will require more dynamic random-access (DRAM - Free Report) from memory providers like Micron.
2. Cycle Differences: According to Baker, historically, now would be the time to sell memory stocks given their valuations and cyclical nature. However, Baker draws a contrast between the current semi cycle and previous cycles because TSMC ((TSM - Free Report) ), a key semi supplier, is keeping its capacity constrained and disciplined. In other words, the typical oversupply glut that crashes memory prices do not currently exist.
3. The Agentic AI Boom: Baker notes that Agentic AIis growing rapidly and will require complex orchestrations, tool calls, and massive memory retrieval.
4. No “Dark Fiber”: The internet boom of the late 1990s provided clues of a bubble. For instance, the fiber-optic buildout eventually had 99% of its capacity unutilized and was fueled mostly by debt. Conversely, the memory and processing chips are largely funded with cash flow from highly profitable hyperscalers and are deployed almost immediately.
Micron: Wall Street Expects Explosive Earnings GrowthWall Street analysts tracked by Zacks concur with Baker’s bullish outlook for the memory industry. For instance, Micron earns a Zacks #1 (Strong Buy) ranking, and analysts expect triple-digit EPS growth through next year.
Image Source: Zacks Investment Research
Top Memory Stocks Retreat to Buy ZonesSanDisk, Micron, and the Roundhill Memory ETF ((DRAM - Free Report) ) are each retreating to the 10-week moving average. Over the past few years, this technical level has produced juicy returns. For instance, if you bought SNDK shares off the 10-week moving average, you more than doubled your money in the past two instances.
Image Source: TradingView
Bottom Line
Gavin Baker’s architecture-first investing approach underscores a critical reality for investors: the AI revolution is only as fast as its physical constraints. The overwhelming weight of evidence suggests that the structural tailwinds of constrained supply and localized device demand remain firmly intact.
Energy and memory stocks have been pick-and-shovel winners in the artificial intelligence (AI) market as supply can't keep up with demand. But Nvidia has shown, through investments in companies working on network optimization and with photonics technology solutions, that a different AI bottleneck has been brewing.
As more people become comfortable talking with chatbots and using AI agents, expectations for quick responses rise. To improve the bots' speed, photonics technology uses light to move data, boosting the efficiency of data transferring between chips and servers.
"The amount of silicon photonics technology capacity that we need is substantially higher than the world has today," Nvidia CEO Jensen Huang said at a conference in March. That puts the spotlight on three companies Nvidia has invested in: Coherent (COHR 9.75%), Lumentum Holdings (LITE 9.09%), and Nokia (NOK 6.51%).
Image source: Getty Images.
1. Coherent In March, Nvidia announced it would invest $2 billion in Coherent and that the two had formed a strategic agreement. The deal gives Nvidia future access and capacity rights to Coherent's advanced laser and optical networking products, while the $2 billion investment is expected to support research and development. As of March 31, Nvidia's stake in Coherent was just under 4%.
In addition to this investment from Nvidia, Coherent has been on a winning streak this year. The stock price is up around 110% as of this writing, and the photonics and optical networking company joined the S&P 500 on March 23.
In its most recent quarterly earnings results, Coherent reported revenue surged 27% to $1.8 billion, earnings per share increased 55% to $1.41, and revenue from its data center and communications segment increased 41%.
Of course, there are also risks with investing in Coherent. One of the biggest is the data center and communications segment mentioned earlier, as it accounts for 75% of the company's revenue. If demand from data centers slows, Coherent could take a significant sales hit.
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2. Lumentum Nvidia was busy in March, as it also announced a $2 billion investment in Lumentum Holdings. And, as with the Coherent deal, Nvidia and Lumentum have a strategic agreement.
Lumentum is also coming off a strong quarterly report, in which it said that total revenue nearly doubled in the period ended March 28, from $425.2 million to $808.4 million. Revenue for its components segment grew 77% to $533.3 million, while its systems segment grew 121% to $275.1 million. For its current quarter, it expects revenue to range from $960 million to $1 billion.
Lumentum's stock price has climbed around 130% this year, but looking ahead, the company faces intense competition, including from Coherent. Its forward price-to-earnings ratio of 50 also suggests high expectations for this company, with little room for error.
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3. Nokia In 2025, Nvidia and Nokia partnered to accelerate the development and deployment of AI networking infrastructure and AI-native mobile networks. Nvidia also invested $1 billion, giving it a 2.9% stake in the company as of March 31.
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Nokia said in a blog post that "Nokia's silicon photonics technology, developed over several product generations, drives the miniaturization and integration of complex optical subsystems into silicon chips, dramatically improving performance, footprint, and power efficiency, while reducing the cost of moving data around data centers and around the world."
This is another stock that's had a strong 2026 thus far, with shares climbing over 100%. Those gains have been tied to optimism about the company's growing AI sales, with revenue from its cloud and AI operations rising 49% in Q1 2026.
That said, Nokia still has to execute on its newer focus in building out AI infrastructure, proving that it's now more than a legacy telecommunications company.
Shares of high-flying photonics names are sliding at midday Thursday. Applied Optoelectronics (NASDAQ:AAOI) stock is down 17% to $114.93, the biggest decliner in the group and easily the sharpest single-session drop of the three. Coherent (NYSE:COHR | COHR Price Prediction) stock is off 10% to $331.57, while Lumentum (NASDAQ:LITE) stock is down 10% to $720.91.
The moves interrupt some of the best runs anywhere in tech this year. Applied Optoelectronics stock is up 233% year to date (YTD), Lumentum stock is up 98% YTD, and Coherent stock is up 80% YTD. Even after today’s selling, all three remain massive 2026 winners tied to the AI optical-networking build-out, and that kind of vertical price action carries built-in vulnerability to a single risk-off session.
Our news feed shows no stock-specific catalyst behind the drop in Applied Optoelectronics, Coherent, or Lumentum. The action reads as a valuation-driven, sector-wide reset in high-beta AI-infrastructure names, with the underlying businesses still intact.
The Valuation Reset After a Blistering Rally The setup for a fast unwind was already in place across Applied Optoelectronics, Coherent, and Lumentum. Per Yahoo Finance, Coherent stock trades at a P/E ratio of 158.42x and Lumentum stock at a P/E ratio of 128.05x. Applied Optoelectronics carries no P/E because the company is unprofitable, with a trailing EPS of -$0.65.
Today’s sell-off fits the broader AI-hardware pullback pressuring other high-flyers. NVIDIA (NASDAQ:NVDA) stock was down 2% midday Thursday, and Intel (NASDAQ:INTC) stock was down 6%. Inverse semiconductor ETFs jumped sharply, a tell that positioning turned defensive across the chip and networking complex heading into July.
The Business Case Under the Sell-Off The fundamentals under the drop in Applied Optoelectronics, Coherent, and Lumentum haven’t cracked. Coherent’s fiscal Q3 2026 revenue rose 21% year over year (YoY) to $1.8 billion, with datacenter and communications revenue jumping 41% YoY as the company deepened its NVIDIA optical-networking partnership. Coherent’s average analyst price target of $384 sits well above the current level, with 12 Buy and 4 Strong Buy ratings against 4 Holds.
Lumentum’s Q3 FY2026 revenue jumped 90% YoY to $808 million, and management guided Q4 revenue to a range of $960 million to $1.01 billion. Lumentum also disclosed a co-packaged optics order for H1 CY27 delivery and an optical-circuit-switch backlog above $400 million, signaling continued design-in traction with hyperscale AI customers.
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Applied Optoelectronics is smaller but scaling fast, with datacenter revenue more than doubling YoY in Q1 FY2026 on 800G transceiver demand tied to a large hyperscale customer. CEO Thompson Lin has previously guided full-year 2026 revenue to potentially exceed $1 billion. That growth story is exactly why the stock rallied so hard in the first place.
Bulls and Bears Split on the Optical Trade The community around Applied Optoelectronics, Coherent, and Lumentum is split after today’s drop. One camp treats the pullback as a tactical entry into a multi-year optical and AI-scaling cycle, citing hyperscaler capex on 800G and 1.6T transceivers, co-packaged optics, and optical circuit switches. The other camp flags stretched multiples and points to recent insider sales as a caution signal.
There’s also insider selling to consider. Executive dispositions at Applied Optoelectronics, Coherent, and Lumentum in May and June appear consistent with pre-scheduled Rule 10b5-1 plans and equity-compensation timing, not directional calls on the businesses. Shareholders watching their exposure to photonics should think about keeping their position sizes modest, given how quickly these high-beta names can move in either direction.
What to Watch Now Traders can watch for whether Applied Optoelectronics stock holds the $115 area and whether Coherent stock and Lumentum stock stabilize into the afternoon. A bounce off of session lows would signal dip-buyers stepping in, while a slide into the close would keep the sector-reset thesis alive for tomorrow’s open.
The next catalyst path is calendar-driven. Coherent and Lumentum will report their fiscal Q4 2026 results later this summer, and hyperscaler capex commentary from mega-cap tech earnings arrives within weeks. Investors weighing their photonics allocation may want to track how AAOI, COHR, and LITE shares trade against the broader semiconductor group over the next several sessions before making any position changes.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Coherent didn't make the cut. Grab the names FREE today.
The Business Services group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Is Coherent (COHR - Free Report) one of those stocks right now? A quick glance at the company's year-to-date performance in comparison to the rest of the Business Services sector should help us answer this question.
Coherent is a member of our Business Services group, which includes 247 different companies and currently sits at #5 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individual stocks within the sector to gauge the strength of each group.
The Zacks Rank is a successful stock-picking model that emphasizes earnings estimates and estimate revisions. The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months. Coherent is currently sporting a Zacks Rank of #1 (Strong Buy).
Within the past quarter, the Zacks Consensus Estimate for COHR's full-year earnings has moved 14.9% higher. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive.
Our latest available data shows that COHR has returned about 99.7% since the start of the calendar year. Meanwhile, stocks in the Business Services group have lost about 8% on average. This means that Coherent is performing better than its sector in terms of year-to-date returns.
Another stock in the Business Services sector, Enpro (NPO - Free Report) , has outperformed the sector so far this year. The stock's year-to-date return is 68.5%.
For Enpro, the consensus EPS estimate for the current year has increased 2.9% over the past three months. The stock currently has a Zacks Rank #2 (Buy).
Looking more specifically, Coherent belongs to the Technology Services industry, which includes 121 individual stocks and currently sits at #154 in the Zacks Industry Rank. This group has lost an average of 0.6% so far this year, so COHR is performing better in this area. Enpro is also part of the same industry.
Investors with an interest in Business Services stocks should continue to track Coherent and Enpro. These stocks will be looking to continue their solid performance.
SummaryCoherent Corp. has surged 196% since my last coverage, significantly outperforming the benchmark.I remain bullish on COHR due to its essential high-speed connectivity solutions for data centers and persistent demand.COHR benefits from multiple long-term tailwinds, supporting expectations for robust top and bottom-line growth.Despite a premium valuation, I maintain a Buy rating, anticipating further upside if bullish catalysts materialize. Jian Fan/iStock via Getty Images
Sure enough, Coherent Corp. (COHR) was one of my best calls over the past 8 months. Why? Since my previous coverage in November, the stock has surged 196%. And it has outperformed the benchmark
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Analyst’s Disclosure: I/we have a beneficial long position in the shares of NVDA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Key Takeaways Coherent's order book surge pushed backlog to record levels and drove $290M CapEx.Customer orders stretch into 2028, while long-term agreements extend revenue visibility to 2030.NVIDIA's $2B investment lifted COHR's cash balance to $3B in Q3. Coherent Corp. (COHR - Free Report) is witnessing a step function increase in its order book rather than the usual increment in cyclical hardware orders. This drastic upsurge in demand pushed Coherent’s backlog into record levels, compelling the company to spend $290 million in CapEx, more than doubling growth from the year-ago quarter.
Image Source: Zacks Investment Research
This lofty asset-heavy expansion is de-risked by customer orders stretching into 2028 and Long-Term Agreements extending to 2030. A heightened revenue visibility guards Coherent from short-term demand contraction that creates a menace within the hardware manufacturing sector.
Coherent’s tactical approach to raise customers’ vested interest effectively lowered the risks associated with aggressive capacity expansion. The company guided customers toward entering agreements that mandate multi-year demand commitments and capital investments, insulating supply.
NVIDIA’s $2-billion equity investment provided an extra padding to Coherent’s cash balance, raising it to $3 billion in the third quarter of fiscal 2026 from $1.5 billion in the previous quarter. This strategic partnership stands as a witness to testify to COHR’s tech as the bottleneck for AI infrastructure in the long run.
Coherent jumped on this operational momentum to deleverage its balance sheet. The company took the major step of wiping out $162 million in debt payments in a single quarter, which reduced its leverage ratio to 0.5X in the third quarter of fiscal 2026 from the previous quarter’s 1.7X. The company’s elite financial profile is dependent on its ability to maximize cash cushions and cut down fixed interest burden.
The combination of long-term commitments stretching into 2030, robust liquidity and a deleveraged balance sheet provides Coherent the bedrock to transform its cyclical hardware business into a predictable revenue-generating machinery. Coherent’s commercial predictability paves the path to future growth while maintaining the strength to sail through macroeconomic setbacks.
COHR’s Price Performance, Valuation & EstimatesCoherent’s stock has rallied a whopping 427.6% in a year, beating the industry’s 10.2% growth. COHR surpassed its competitors, IPG Photonics (IPGP - Free Report) and Novanta (NOVT - Free Report) , which have gained 75% and 26.8%, respectively, in the same period.
1-Year Share Price Performance Image Source: Zacks Investment Research
From a valuation perspective, Coherent trades at a 12-month forward price-to-earnings ratio of 51.83, cheaper than IPG Photonics’ 59.14, while being more expensive than Novanta’s 40.51.
P/E F12M Image Source: Zacks Investment Research
Coherent has a Value Score of D. IPG Photonics and Novanta both carrya Value Score of F.
The Zacks Consensus Estimate for COHR’s earnings for 2026 and 2027 has increased 1.5% and 11.9%, respectively, over the past 60 days.
COHR currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tower’s advanced silicon photonics platform enables high-bandwidth,
energy-efficient data center connectivity
MIGDAL HAEMEK, Israel, June 18, 2026 - Tower Semiconductor (NASDAQ/TASE: TSEM), the leading foundry for high-value analog semiconductor solutions, today announced a significant milestone. The company, in partnership with Marvell Technology, has shipped over five million coherent photonic integrated circuits (PICs) to Marvell global customers, delivering advanced, high-performance photonics solutions to address the growing bandwidth and efficiency demands of AI-driven data center interconnect (DCI) networks.
Coherent PICs are complex because they must control the phase and polarization of light, not just the amplitude. The design and process requirements for these PICs are far more stringent compared to simpler direct-detect chips.
“As optical transceiver applications and requirements continue to evolve, photonics platforms must evolve to meet these requirements. This is especially true in the area of coherent optical transceivers,” said Dr. Ed Preisler, Vice President and General Manager of the RF Business Unit at Tower Semiconductor. “We are proud to collaborate with Marvell to stay at the forefront in this field.”
Tower has collaborated with Marvell to advance next-generation coherent technologies, including process capabilities, such as the integration of non-silicon materials, the 3D integration of electronics and the enablement of advanced optical packaging such as V-Grooves, which serve to extend the performance and functionality of silicon photonics platforms.
“This milestone demonstrates the strength of our collaboration,” said Dr. Radha Nagarajan, Senior Vice President and Chief Technology Officer, Optical Engineering, at Marvell. “As one of our key ecosystem partners, we look forward to continue working with the Tower team to advance next-generation coherent technologies for scale-across data center architectures, providing customers with the latest efficient, high-performance photonics technologies to power their advanced AI workloads.”
For additional information about Tower Semiconductor’s SiPho technology platform, visit here.
For additional information about Marvell, visit here.
About Tower Semiconductor
Tower Semiconductor Ltd. (NASDAQ/TASE: TSEM), the leading foundry of high-value analog semiconductor solutions, provides technology, development, and process platforms for its customers in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. Tower Semiconductor focuses on creating a positive and sustainable impact on the world through long-term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiPho, SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, displays, integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle as well as process transfer services including development, transfer, and optimization, to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor currently owns one operating facility in Israel (200mm), two in the U.S. (200mm), and two in Japan (200mm and 300mm) which it owns through its 51% holdings in TPSCo and shares a 300mm facility in Agrate, Italy with STMicroelectronics. For more information, please visit: www.towersemi.com.
Safe Harbor Regarding Forward-Looking Statements
This press release includes forward-looking statements, which are subject to risks and uncertainties. Actual results may vary from those projected or implied by such forward-looking statements. A complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect Tower’s business is included under the heading “Risk Factors” in Tower’s most recent filings on Forms 20-F, F-3, F-4 and 6-K, as were filed with the Securities and Exchange Commission (the “SEC”) and the Israel Securities Authority. Tower does not intend to update, and expressly disclaim any obligation to update, the information contained in this release.
Many discussions about the artificial intelligence (AI) market revolve around Nvidia (NVDA +3.08%), the world's leading producer of data center GPUs. Those chips, which most of the world's top AI companies use, are still the best picks and shovels for the AI gold rush.
However, the AI market's growth is also generating strong tailwinds for optical networking companies, which manufacture optical transceivers and components that convert electronic data into light signals and transmit them through fiber-optic cables. Many data centers are now upgrading their older copper wires, which are too slow and generate too much heat to handle the latest cloud and AI applications, to faster fiber-optic components.
Image source: Getty Images.
That's why it wasn't surprising when Nvidia invested $2 billion in Coherent (COHR +2.90%), one of the world's largest photonics companies, in early March. Coherent's stock has rallied about 30% since that announcement, but it could still be worth buying as a long-term AI play.
How fast is Coherent growing? Coherent, which was known as II-VI until it acquired the original Coherent and inherited its brand and ticker in 2022, generates most of its revenue from its optical business. That segment -- which was once a cyclical, slower-growth business -- became its core growth engine as the cloud and AI markets expanded. It also sells industrial lasers and specialty chips, but those smaller businesses don't generate nearly as much growth as its optical networking division.
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In fiscal 2025 (which ended last June), Coherent's revenue rose 23%. From fiscal 2025 to fiscal 2028, analysts expect its revenue to grow at a 31% CAGR. They also expect its EPS to turn positive in fiscal 2026 and grow at a 52% CAGR over the following two years. Its rising sales of ultra-fast 800G, 1.6T, and next-generation 3.2T optical products to data centers should drive most of that growth. It's also firmly backed by Nvidia, which works with the company to connect millions of its GPUs across "AI factories", and it was recently granted $50 million in funding under the CHIPS and Science Act to expand its manufacturing plant in Sherman, Texas.
But does Coherent deserve its premium valuation? Coherent's stock isn't cheap at 65 times next year's earnings. However, it's transforming from a cyclical networking play to a high-growth AI play -- and it could continue to command a premium valuation for the foreseeable future. So if you expect the AI market to keep expanding over the next decade, it might be smart to invest in Coherent before it attracts even more attention.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Coherent and Nvidia. The Motley Fool has a disclosure policy.
SHERMAN, Texas, June 16, 2026 (GLOBE NEWSWIRE) -- Coherent Corp. (NYSE: COHR), the global photonics leader, today announced it has signed a letter of intent to receive up to $50 million in direct funding under the CHIPS and Science Act from the U.S. Department of Commerce to expand its world-leading 6-inch Indium Phosphide (InP) semiconductor manufacturing facility in Sherman, Texas.
The investment will support growing demand for optical networking technologies that power AI datacenters and further strengthen Coherent’s longstanding and recently expanded partnership with NVIDIA. At project completion, the Sherman site is expected to create more than 1,000 jobs, including more than 550 direct advanced manufacturing, engineering, and technical roles. The expansion will double manufacturing production space and quadruple wafer production capacity, significantly increasing domestic production of critical AI-enabling technologies and reinforcing American leadership in the technologies that power the AI economy.
The CHIPS award builds upon approximately $20 million in support previously provided through the Texas Semiconductor Innovation Fund and the Sherman Economic Development Corporation.
The announcement coincides with a groundbreaking ceremony to be held later today with NVIDIA, federal and state officials, and local community leaders at Coherent’s Sherman facility. Together, the proposed CHIPS investment, NVIDIA partnership, and Sherman expansion underscore the increasingly vital role of photonics innovation in enabling AI infrastructure, advanced manufacturing, and American technology leadership.
“AI is transforming our world and driving a new era of American manufacturing to build the infrastructure that will power the AI datacenters of the future,” said Jim Anderson, Chief Executive Officer of Coherent. “Semiconductor photonic devices are essential building blocks of AI infrastructure, enabling the high-speed connectivity required to move unprecedented amounts of data between processors, memory, and systems. This investment expands America’s capacity to manufacture critical AI-enabling technologies, creates high-value jobs, and reinforces U.S. leadership in advanced manufacturing, photonics, and innovation. We thank our partners at NVIDIA, Secretary Lutnick, Bill Frauenhofer and the CHIPS Program Office team, Governor Abbott, Adriana Cruz and the Texas Semiconductor Innovation Fund, and Kent Sharp and the Sherman Economic Development Corporation for their continued support as we invest in expanded capacity and future growth.”
Expanding the Foundation of AI Infrastructure
Coherent’s Sherman facility manufactures photonic devices based on InP, a specialized semiconductor material used to create high-performance optical networking components that power modern AI systems.
The site is home to the world’s first and largest volume-production 6-inch InP manufacturing platform, providing the scale needed to support rapidly growing demand for AI-driven optical interconnect technologies. As AI workloads continue to scale, these technologies are becoming increasingly critical to overcoming data movement bottlenecks and enabling higher-performance, more energy-efficient computing architectures.
The expansion will add advanced wafer fabrication equipment and cleanroom capacity to increase production of InP-based photonic devices at scale, reinforcing Sherman’s position as one of the world’s leading centers for optical networking innovation and production.
Strengthening U.S. Manufacturing Leadership
Coherent’s expansion will strengthen domestic supply chain resilience and expand U.S.-based manufacturing capacity for strategically important semiconductor and photonics technologies.
“Indium phosphide photonics are essential for enabling high-speed data transmission within AI systems, telecommunications, and advanced networks,” said Bill Frauenhofer, Executive Director for Semiconductor Investment and Innovation at the Department of Commerce. “The CHIPS incentives will expand production capability, strengthen the U.S. semiconductor supply chain, and accelerate the next generation of critical optical technologies.”
Partnership Driving Future Growth
Coherent and NVIDIA have worked together for more than two decades to advance technologies that support increasingly demanding compute and networking architectures. The Sherman expansion reflects the growing importance of American manufacturing capacity, resilient supply chains, and photonics innovation as AI systems continue to scale.
“AI factories are the infrastructure of the new industrial revolution. Connecting millions of GPUs into one thinking machine requires optical technology built for scale, speed, and energy efficiency," said Jensen Huang, founder and CEO of NVIDIA. "Coherent has been an important NVIDIA partner for more than two decades, and its expanded InP manufacturing in Texas will help strengthen the U.S. supply chain for the AI infrastructure the world is racing to build."
Together, the proposed CHIPS award, NVIDIA partnership, and Sherman expansion position Coherent to help meet accelerating demand for AI infrastructure while strengthening America’s role in the global supply chain for advanced photonics, optical networking, and next-generation computing technologies.
About Coherent
Coherent is the global photonics leader. We harness photons to drive innovation. Industry leaders in the datacenter, communications, and industrial markets rely on Coherent’s world leading technology to fuel their own innovation and growth. Founded in 1971 and operating in more than 20 countries, Coherent brings the industry’s broadest, deepest technology stack; unmatched supply chain resilience; and global scale to help its customers solve their toughest technology challenges. For more information, please visit us at coherent.com.
Media Contact
Stacey Keegan
Vice President, Corporate Communications [email protected]
Artificial intelligence (AI) has created a terrific demand for several hardware components used in data centers to help train AI models and run inference applications. The demand for some of these components, such as memory chips, has exceeded supply, thereby creating a significant shortage that's expected to last for years.
In fact, memory chips are expected to remain in short supply until the end of the decade. That's because memory solves an important bottleneck in the AI infrastructure ecosystem, enabling the rapid transport of massive amounts of data that allows accelerator chips to unlock their full potential.
However, the need to quickly transmit large datasets is also driving significant demand for optical networking components. Goldman Sachs sees optical networking as the next megatrend in the AI infrastructure space. The investment bank estimates that the total addressable market (TAM) of optical networking components could jump by a whopping 9x to $154 billion in just two years.
That's great news for Lumentum Holdings (LITE 8.55%), Ciena (CIEN 7.04%), and Coherent (COHR 7.46%), three optical networking specialists that have jumped impressively in 2026 so far. Let's see why these three AI stocks have room for more upside.
Image source: Getty Images.
Lumentum, Ciena, and Coherent have been delivering phenomenal earnings growth The parabolic jump in demand for optical networking components has created a massive supply shortage. According to management consulting firm McKinsey, optical transceivers that transfer data at 800 gigabits per second (Gbps) will fall short of demand by 40% to 60% through 2027. Meanwhile, optical transceivers capable of transporting data at 1.6 terabits per second (Tbps) will fall short of demand by 30% to 40% through 2029.
This explains why Lumentum, Ciena, and Coherent have been witnessing stunning earnings growth lately.
Data by YCharts
Importantly, their red-hot earnings growth is here to stay. We have already seen that Goldman Sachs anticipates a stunning rise in the optical networking TAM, and it is unlikely that equivalent supply will come online so quickly. Not surprisingly, all three companies noted in their latest earnings calls that demand will exceed supply.
This explains why these companies can raise the prices of their products. For example, Lumentum CEO Michael Hurlston remarked on the May earnings call that "there's room from here to continue to really step up margin." The company's non-GAAP earnings per share increased by just over 4x year over year to $2.37 per share.
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Lumentum's earnings are expected to increase by 236% year over year in the ongoing quarter, while its full-year earnings could jump by 4x, according to consensus estimates. Ciena, which recently released its fiscal 2026 second-quarter results (for the quarter ended May 2), posted a 290% year-over-year increase in earnings. Even better, Ciena raised its full-year forecast due to improving demand for optical components.
The company's backlog increased by more than $600 million sequentially in fiscal Q2, taking its overall backlog to an impressive $7.7 billion. That's higher than Ciena's fiscal 2026 revenue guidance of $6.3 billion, suggesting that it can further increase guidance as the year progresses. So, don't be surprised if Ciena's fiscal 2026 earnings growth exceeds the 147% spike analysts are estimating.
Coming to Coherent, the company clocked a 55% year-over-year increase in earnings per share to $1.41 in the third quarter of fiscal 2026 (which ended on March 31). Just like the other two companies, Coherent is also focused on rapidly expanding its production capacity to meet rapidly rising end-market demand.
Importantly, Coherent management notes that it is now receiving orders for calendar 2028 and is signing long-term agreements (LTAs) with customers that extend into 2030. Not surprisingly, Coherent anticipates its fiscal 2027 growth rate to improve from this fiscal year's levels. Analysts are expecting a 55% increase in its earnings in the current fiscal year to $5.45 per share, and the good part is that its growth is likely to accelerate nicely going forward.
Data by YCharts
These stocks are expensive, but investors should look at the bigger picture All three stocks have appreciated substantially this year, which explains why they are trading at expensive multiples.
Data by YCharts
However, the chart above also shows that their forward earnings multiples are significantly lower. That's because all three companies are on track to deliver substantial increases in earnings. Also, the dynamics of the optical networking market, where demand is likely to substantially exceed supply due to the enormous investments in AI data centers, suggest that these companies can sustain their terrific growth rates beyond the next three years.
That's why investors looking to add growth stocks capitalizing on the next big AI megatrend can consider buying Lumentum, Ciena, and Coherent before they soar higher.
Key Takeaways Coherent trades at 48.27X forward P/E, more than double the industry average of 21.76X.COHR's 1.03 PEG sits near equilibrium and below the industry's 1.12, suggesting a relative discount.Coherent's margins expanded as it shifted from industrial lasers to higher-margin AI infrastructure. Coherent Corp. (COHR - Free Report) is currently trading at a 12-month forward price-to-earnings (P/E) multiple of 48.27X, more than double the industry average of 21.76X. While traditionally this is a case of overvaluation, its P/E-to-growth (PEG) ratio suggests otherwise. COHR’s 1.03 PEG is closer to 1, suggesting perfect equilibrium between valuation multiple and anticipated growth. Moreover, the industry’s PEG is at 1.12, implying Coherent’s relative discount to its peers.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
To validate the stock’s justified premium, we need to look beyond basic growth rates and evaluate the structural quality of earnings. In the third quarter of fiscal 2026, Coherent’s gross margin expanded 71 basis points (bps) sequentially and 243 bps on a year-over-year basis. This upward trajectory highlights the company’s shift from a lower-margin industrial lasers business to a higher-margin AI infrastructure.
Coherent’s operating margin moved up 20 bps sequentially and 633 bps on a year-over-year basis, hinting at an immense enhancement in its operational prowess. Such progress is a classic case of revenue growth dropping to the operating profit at an exponential rate. A swift increase in profits can reduce the forward P/E, making the stock highly appealing to investors.
A negative free cash flow (FCF) of $383 million as of the end of March 2026 can be a waving red flag for a pricey stock. However, Coherent deals with the AI infrastructure boom, which means that the negative FCF is constructive. CapEx hit the $290-million mark as of the end of the third quarter of fiscal 2026 to construct cleanrooms and double its internal manufacturing capacity, which is a strategic response to growing demands.
Coherent’s margin expansion and negative FCF demonstrate massive scale-up to dominate the AI transceiver market. A $2-billion equity investment from NVIDIA mitigates the financial risks of cash burn. COHR’s premium is tied to its ability to pivot from a negative FCF to a positive one in the near future as the investments made to expand capacity bear fruit.
COHR’s Price Performance, Valuation & EstimatesCoherent’s stock has rallied a whopping 376.7% in a year, beating the industry’s 8.3% growth. COHR surpassed its competitors, IPG Photonics (IPGP - Free Report) and Novanta (NOVT - Free Report) , which have gained 68.3% and 29.1%, respectively, in the same period.
1-Year Share Price Performance Image Source: Zacks Investment Research
Over the past three months, COHR has risen 55.6%, outpacing the industry’s 10.5% growth. IPG Photonics’ stock has remained flat, while Novanta has moved up 36% in the same period.
Coherent has a Value Score of D. IPG Photonics and Novanta both carry a Value Score of F.
The Zacks Consensus Estimate for COHR’s earnings for 2026 and 2027 has increased 1.7% and 10.1%, respectively, over the past 60 days.
COHR currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
On May 29, 2026, Coherent Corp (COHR) shares fell 4.1% to $361.47. This decline comes in the context of a 52-week trading range that has seen prices as high as
Gavin Baker, the Chief Investment Officer of the hedge fund Atreides Management, has established itself as one of the top tech investors operating today.
In eight years managing the OTC Portfolio at Fidelity, Baker achieved a compound annual return rate of more than 19% and outperformed 99% of his peers on Morningstar.
At Atreides, Baker now oversees around $7 billion in public and private investments, and, though his complete returns aren't public, he does have a Sharpe ratio of 2.46, according to Tipranks, well above the average hedge fund, meaning he's able to achieve higher returns without taking on more risk.
Baker also shares his insights on social media, and he just dropped a gem on AI stock valuations.
Speaking on the All-In podcast, he described the AI sector as "cross-sectionally inefficient," explaining that the multiples in the sector don't make sense relative to one another.
As he observes, memory stocks like Micron (MU +0.17%) and Sandisk (SNDK +6.90%) are cheap right now. Baker also says Nvidia (NVDA 0.03%) is trading at a really low P/E.
Conversely, he said that multiples in stocks dealing with power, cooling, and optical are much higher. Stocks like Lumentum Holdings (NASDAQ: LITE), an optical chipmaker that has jumped 10x over the last year, trade at a triple-digit price-to-earnings ratio. Similarly, Coherent (COHR +6.65%), another optical stock that has soared over the last year, trades at a triple-digit P/E.
Baker goes on to conclude that if the multiples on stocks like Coherent and Lumemtum are correct, then memory and Nvidia stocks should go a lot higher. On the other hand, if multiples on Nvidia and Micron are correct, then those other stocks are likely to underperform.
Image source: Getty Images.
Is there just one AI cycle? Baker's theory assumes that there is one AI cycle driving all of these stocks. According to the line of reasoning above, the optical names are in the same AI cycle as memory stocks like Micron. If the AI boom continues, they'll win, but if it fades, they'll be losers.
Memory chip stocks have a history of cyclicality, and investors are wary of another boom-and-bust in the sector as prices can fluctuate wildly due to shifts in inventory from gluts to shortages.
Cyclicality is prevalent across the semiconductor sector, including in optical chips, though the cycles have historically been more severe in memory. What is different about AI is that it has sent these stocks off the charts, arguably making history less useful by comparison, as some have argued AI is a secular boom. If supply/demand dynamics change, however, the downside of the cycle could be brutal.
The smart way to invest in AI stocks While momentum can trump valuation in the short term, valuation almost always matters eventually, so the cheaper stocks do have the advantage here. As the chart below shows, Lumentum stock is significantly more expensive than Micron and Nvidia, even though it's not growing faster, and it's much less profitable on a margin basis.
MU Revenue (Quarterly YoY Growth) data by YCharts
Part of Lumentum's gains over the last year have come from multiple expansion, while that isn't true of Micron, and Nvidia's valuation has actually fallen.
Following Baker's commentary, it looks like the smart way to invest in AI stocks is to choose cheaper names like Micron and Nvidia and avoid stocks like Lumentum that have relied on multiple expansion for growth.
If the AI sector rises and falls as a whole, the cheaper stocks should outperform the pricier ones over the long haul.
While investors know Nvidia (NVDA 0.03%) as the chipmaker at the center of the artificial intelligence (AI) universe, the company also invests in other companies, several of which are publicly traded.
These are typically other AI companies that Nvidia partners with or that are key suppliers or customers.
Nvidia's investment portfolio swelled close to $18.4 billion at the end of the first quarter of this year. During this time, Nvidia plowed $3.8 billion into two AI stocks: one it already owned and the other a new position.
Image source: Nvidia.
Doubling down on CoreWeave In the quarter, Nvidia increased its stake in the AI data center company CoreWeave (CRWV +9.17%) by 95%. Its position in the company increased by more than $1.9 billion at the end of the quarter, bringing the total position to more than $3.65 billion.
Nvidia and CoreWeave have long had a partnership, as CoreWeave purchases graphics processing units (GPUs) from Nvidia and deploys them in its data centers to rent compute to companies looking to deploy AI solutions.
In January, the companies announced they had expanded their relationship in order for CoreWeave to accelerate the construction of more than 5 gigawatts of AI data centers by 2030. Data center build-out is key to the AI revolution, so it's in Nvidia's interest to see CoreWeave grow.
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Along with the announcement, Nvidia said it had invested $2 billion into Class A shares of CoreWeave at an average cost of $87.20 per share. Now owning more than 47 million shares, Nvidia's stake is close to 9% in the company.
While CoreWeave is one of the larger data center companies and is likely to continue to benefit as long as AI remains strong, the company's balance sheet is a bit worrisome. Building data centers is a capital-intensive business, and CoreWeave is highly leveraged. It has significantly diluted shareholders' equity.
At the end of the first quarter, CoreWeave's total debt-to-equity ratio, a measure of default risk, was high at 5.2. The company's total liabilities-to-equity ratio, which focuses more on overall leverage, was also very high at 10.6.
The company's outstanding share count has also more than doubled over the past year, driven by multiple private offerings, typically involving convertible notes that can eventually be converted into shares.
I'm not a huge fan of CoreWeave due to these balance sheet issues and the growing competition in the space. If the AI trade does take a turn for the worse, CoreWeave could take a big hit.
A new partnership In March, Nvidia also announced a new partnership with Coherent (COHR +6.65%). Coherent is a leader in photonics, making components like lasers and optical transceivers that are becoming increasingly important for AI infrastructure.
Nvidia and Coherent's non-exclusive agreement involves a multibillion-dollar purchase commitment from Nvidia and future access and capacity rights to Coherent's advanced laser and optical networking products. The partnership also includes a $2 billion investment from Nvidia to support research and development.
Coherent's products have become important to Nvidia as data centers scale to thousands of GPUs, which require more and more data movement between GPUs before that data is eventually fed into the GPUs.
Specifically, Nvidia uses Coherent's silicon photonics to build Spectrum-X switches. These Ethernet networking platforms are key for "building multi-tenant, hyperscale AI clouds," according to Nvidia.
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Coherent is similar to Micron. While Micron differs in that it provides memory that sits on GPUs and feeds them data, both companies have become key components of the AI supply chain, especially as the industry scales.
Coherent's stock has been on a big run, rising nearly 370% over the past year. The stock also trades at close to 70 times forward earnings, although at a more manageable 10.5 times forward revenue.
This is also another stock that will likely live and die with the AI trade, but seems to be in a good spot at the moment. I think investors can take a small position right now, but should wait for pullbacks to add at better entry points or practice dollar-cost averaging to build the position more slowly.
Coherent is initiated at a buy rating, supported by accelerating growth, robust Q4 guidance, and a long-term optical/photonics opportunity. Q3 saw 21% YoY revenue growth, 55% EPS growth, and expanding margins, with data center demand outpacing supply. Q4 guidance implies further acceleration: 29% revenue growth, 62% EPS growth, and continued margin expansion.
Meanwhile, Coherent Corp. (NYSE:COHR) quietly hit a new all-time high, and it’s playing the exact same trade.
COHR stock is at all-time highs. See the chart and price action here. Optical Trade is on FireHuang’s bullish commentary on AI infrastructure — and specifically on the accelerating demand for high-speed optical connectivity inside hyperscale data centers — sent Marvell flying 25% and Coherent up 16% on Tuesday.
Huang’s remarks reinforced what the optical transceiver trade has been pricing in for months: AI clusters are growing faster and require more bandwidth than anyone modeled a year ago.
Marvell, as one of the most visible names in custom silicon and optical networking, got the headlines from Huang.
Coherent, which manufactures the actual optical transceivers and components that make those data center interconnects work, got the all-time high.
The asymmetry in investors' attention is worth pausing on.
Marvell is a $241.28 billion market cap name that every AI infrastructure investor already has in a model.
Coherent is a $65.76 billion company that tends to get overlooked in the same conversation — even though its revenue exposure to AI optical demand is just as direct.
When Huang says the data center is being rewired around optical interconnects, that’s not just a Marvell headline. It’s a Coherent headline, too.
Expert IdeasWall Street has been quietly building conviction in Coherent.
The three most-recent analyst ratings were released by TD Cowen, Rosenblatt and Stifel in May and hold an average price target of $410.67 between them.
The average price target of $247.58 actually sits well below where the stock is trading now, meaning the most aggressive bulls had their numbers right and the consensus still hasn’t caught up.
The 52-week range says everything: COHR was trading as low as $76.88 a year ago. Tuesday’s $426.67 mark is a 455% run from that trough.
The next real test is whether management can back up the multiple in the next earnings update with hard data on hyperscaler transceiver volumes.
COHR Stock Price Activity: Coherent stock was up 17.74% at $427.29 at the time of publication on Tuesday, according to Benzinga Pro.
Over the past month, COHR has gained about 22.9% versus a 5.5% rise in the S&P 500 and is up roughly 126% year-to-date compared to the index’s 10.8% gain. The stock is trading at new 52-week highs.
Photo: Shutterstock
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Coherent and Lumentum Holdings shares surged on Tuesday as investors piled into optical networking stocks.
The rally followed comments from Nvidia Chief Executive Jensen Huang, highlighting the growing importance of optical interconnects in artificial intelligence data centers.
The rally came alongside a sharp gain in Marvell Technology shares after Huang suggested the chipmaker could become the next trillion-dollar company.
Investors extended that enthusiasm across the broader optical networking ecosystem, lifting companies that supply critical components used in AI infrastructure.
Coherent shares COHR rose 17% to $425.64, putting the stock on track for an all-time closing high.
Lumentum gained 13%, while Corning, which produces fiber used in optical networking systems, also climbed 13%.
Investor enthusiasm was fueled by Huang's remarks at Marvell's Computex 2026 keynote in Taipei, where he discussed the growing need for optical connectivity as AI infrastructure scales.
According to Huang, copper remains useful for data transmission, but its limitations are becoming increasingly apparent as AI workloads expand.
"We should use copper as much as we can, for as long as we can, but copper has its limits... You use optics wherever you must, you use copper wherever you can," Huang said.
The comments reinforced a trend that many investors have already been betting on: the rapid expansion of AI data centers is creating significant demand for high-speed optical networking equipment.
Marvell manufactures digital signal processors used in optical transceivers that connect servers inside AI data centers.
Coherent and Lumentum supply critical optical components and hardware that enable those connections, making them direct beneficiaries of increased spending on AI infrastructure.
Lumentum also maintains a formal partnership with Marvell, further linking its growth prospects to demand for optical networking technologies.
While Marvell attracted much of the attention following Huang's remarks, investors also turned their focus toward Coherent.
The company manufactures optical transceivers and related components that are essential for moving data across hyperscale AI clusters.
According to market observers, Coherent's exposure to AI-related optical demand is comparable to many of the more widely followed AI infrastructure companies.
Analyst sentiment has also improved. Recent ratings from TD Cowen, Rosenblatt, and Stifel carried an average price target of $410.67, although the stock now trades above those levels following its latest rally.
The gains across optical networking stocks highlight how AI-related investments are increasingly benefiting a wide network of suppliers beyond chipmakers.
Nvidia has already committed substantial capital to photonics and optical networking companies.
Over the past three months, the company has invested $2 billion each in Lumentum and Coherent, committed $500 million to Corning for advanced optical connectivity, and participated in Ayar Labs' $500 million funding round.
Those investments, combined with Huang's latest comments, reinforced investor confidence that optical networking will remain a critical component of next-generation AI infrastructure.
The broader trend has also lifted investment vehicles tied to data center development.
The Global X Data Center & Digital Infrastructure ETF, which tracks companies across the data center ecosystem, has gained 50% this year.
For investors, Tuesday's rally underscored a growing market view that as AI clusters become greater and more complex, demand for optical connectivity providers such as Coherent and Lumentum could continue to rise alongside spending on AI infrastructure.
It has been about a month since the last earnings report for Coherent (COHR - Free Report) . Shares have added about 32.2% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Coherent due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
COHR Q3 Earnings Meet EstimateCoherent reported third-quarter fiscal 2026 adjusted earnings of $1.41 per share, which matched the Zacks Consensus Estimate and increased 55% year over year. Revenues of $1.8 billion rose 21% year over year and surpassed the consensus estimate of $1.78 billion by 1.5%.
Management highlighted exceptionally strong demand trends across AI networking infrastructure, with bookings reaching record levels and backlog extending into 2028. The company also noted that long-term agreements now extend through the end of the decade.
AI Data Center Demand Drives COHR GrowthCoherent’s Datacenter & Communications segment remained the primary growth engine, accounting for 75% of total revenues in the quarter compared with 65% in the year-ago period. Segment revenues increased more than 40% year over year.
Within the data center business, revenues climbed 13% sequentially and 37% year over year, marking the second consecutive quarter of double-digit sequential growth. Growth was fueled by strong demand for 800G and 1.6T transceivers as hyperscale customers expanded their AI infrastructure deployments. Management expects further acceleration in the current quarter, supported by improving supply availability and capacity expansion initiatives.
The communications business also delivered strong results, with revenues increasing 16% sequentially and 60% year over year. Demand remained robust for data center interconnect products, including ZR and ZR+ transceivers, as well as broader transport networking solutions.
Coherent Expands Capacity Amid Strong OrdersManagement stated that indium phosphide capacity expansion remains a key strategic priority due to industry-wide supply constraints. The company expects to double its internal indium phosphide output capacity by the end of 2026, one quarter ahead of schedule and plans to more than double capacity again by the end of 2027.
Coherent’s 6-inch indium phosphide platform is now producing electro-absorption modulated lasers, CW lasers and photodiodes with yields exceeding legacy 3-inch production lines. During the quarter, the company shipped its first transceivers incorporating components manufactured on the 6-inch platform, contributing to both revenue growth and gross margin expansion.
Management also emphasized growing opportunities in optical circuit switching (OCS) and co-packaged optics (CPO). The company increased its estimate of the OCS market opportunity to more than $4 billion and expects initial scale-out CPO revenues to ramp up in the second half of 2026.
NVIDIA Partnership Strengthens Long-Term OutlookDuring the quarter, Coherent announced a strategic partnership with NVIDIA focused on advanced optical networking and CPO technologies for AI data centers. The agreement includes a $2 billion equity investment from NVIDIA and a multi-year supply agreement extending through the end of the decade.
Management believes the partnership strengthens Coherent’s position in next-generation AI networking infrastructure and creates meaningful long-term revenue visibility across lasers, optical components and integrated photonic systems.
Margins Expand on Better Mix & Cost EfficienciesNon-GAAP gross margin expanded 105 basis points year over year to 39.6%, driven by lower product input costs, pricing optimization and yield improvements from the 6-inch indium phosphide ramp.
Non-GAAP operating margin improved to 20.3% from 18.6% in the prior-year quarter. Meanwhile, non-GAAP operating expenses increased due to continued investments in research & development initiatives supporting transceivers, CPO and high-value optical networking systems.
The company ended the quarter with $3 billion in cash, up significantly from $1.5 billion in the previous quarter, primarily due to NVIDIA’s investment. Coherent also reduced its debt leverage ratio from 1.7 to 0.5 sequentially after making $162 million in debt payments.
COHR Guides Strong Sequential GrowthFor fourth-quarter fiscal 2026, Coherent expects revenues to be between $1.91 billion and $2.05 billion. The company guided adjusted earnings per share between $1.52 and $1.72. Adjusted gross margin is expected to be in the range of 39-41%.
Management expects fiscal 2027 revenue growth to exceed fiscal 2026 growth, supported by expanding AI infrastructure deployments, growing optical networking demand and continued production capacity increases.
How Have Estimates Been Moving Since Then?It turns out, fresh estimates have trended upward during the past month.
VGM ScoresCurrently, Coherent has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Coherent has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry PlayerCoherent belongs to the Zacks Technology Services industry. Another stock from the same industry, Aptiv PLC (APTV - Free Report) , has gained 27.7% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.
APTIV PLC reported revenues of $5.09 billion in the last reported quarter, representing a year-over-year change of +5.4%. EPS of $1.71 for the same period compares with $1.69 a year ago.
APTIV PLC is expected to post earnings of $1.43 per share for the current quarter, representing a year-over-year change of -32.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for APTIV PLC. Also, the stock has a VGM Score of B.
Nvidia (NVDA 0.03%) has been one of the best-performing stocks in the artificial intelligence (AI) era, which isn't surprising, as its chips have been instrumental in the training of large language models (LLMs) over the years.
An investment of $1,000 made in Nvidia stock three years ago is now worth more than $5,400. The good news for Nvidia investors is that its growth continues to accelerate. This was evident from Nvidia's latest quarterly report. However, the stock's returns have been lukewarm so far this year, with shares gaining just 14% despite the consistently solid growth that Nvidia has been clocking.
There are a few reasons this may be the case, such as rising competition in AI chips and concerns about Nvidia's ability to deliver further upside after becoming the largest company in the world. However, the market may be making a big mistake by viewing Nvidia's AI prospects in isolation. It has been expanding its wings in AI by investing in other companies that are playing a critical role in this space.
Let's take a closer look at how Nvidia's investments make it a much bigger AI play than the market may realize.
Image source: Nvidia.
Nvidia is tapping these fast-growing niches through its investments AI is not just about the graphics processing units (GPUs) that Nvidia sells. The booming investment in AI infrastructure has created demand for additional components, such as custom processors and networking products. Nvidia has stakes in companies such as Lumentum Holdings (LITE +3.06%), Coherent (COHR +6.65%), and Marvell Technology (MRVL +1.23%).
Lumentum and Coherent manufacture optical networking, photonics, and laser components that enable the rapid transfer of large amounts of data in data centers and AI chip clusters. Nvidia announced a $2 billion investment in Coherent in March this year to "support research and development, future capacity and operations as Coherent builds out its U.S.-based manufacturing capabilities."
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It also announced a similar investment in Lumentum on the same day for identical reasons. Nvidia notes that optical networks will play a critical role in scaling up AI data centers and factories. That's not surprising, as optical networks support help transfer large datasets with low latency in AI chip clusters, enabling AI accelerators to perform optimally with minimal data loss.
Fast networking and high bandwidth reduce downtime for AI accelerators, such as GPUs. This explains why demand for optical networking components is outpacing supply. McKinsey estimates that demand for high-speed 800 Gbps (gigabits per second) optical transceivers deployed in AI data centers will exceed production by 40% to 60% through 2027.
As a result, the prices of these optical components are rising sharply, driving phenomenal growth for Coherent and Lumentum.
Data by YCharts
This terrific earnings growth is translating into healthy upside on the stock market. Lumentum stock has jumped by over 1,100% over the past year, while Coherent has clocked 444% gains. Moreover, Nvidia's investments in these companies should ensure it has access to a supply of optical networking components by helping them build additional capacity.
For example, Coherent CEO Jim Anderson pointed out in March that Nvidia's investment will increase the chip giant's "access to include multiple product families to help them build the AI data centers of the future." Similarly, Lumentum is going to invest "in a new fabrication facility to increase capacity and accelerate innovation" following Nvidia's investments.
So, Nvidia is taking steps to ensure that it controls the AI infrastructure supply chain more tightly by investing in the likes of Coherent and Lumentum, which provide critical components necessary for scaling up AI data centers.
Meanwhile, Nvidia's $2 billion investment in Marvell Technology, announced on March 31, is another strategic move. Marvell designs custom AI processors and networking components that are experiencing strong demand as AI inference grows. Nvidia's investment in Marvell will enable it to make rack-scale server systems that integrate custom AI processors, server processors, and networking components into a single platform.
The partnership also strengthens Nvidia's position in optical networking and silicon photonics. What's worth noting is that Marvell designs AI chips and networking components for major hyperscalers and has multiple design wins in the pipeline, poised to go into production over the next couple of years. So, it was easy to see why Marvell raised its full-year guidance when it released its fiscal 2027 first-quarter results (for the three months ended May 2) on May 27.
The company anticipates a 40% increase in revenue in the current fiscal year to $11.5 billion, followed by a larger 45% increase in the next fiscal year. What's more, its earnings growth is also poised to take off.
Data by YCharts
So, Nvidia's investment in Marvell is likely to become a profitable one in the long run. At the same time, its partnership for custom AI processors should ensure the chip giant remains a dominant player in the AI semiconductor space. In fact, Nvidia CEO Jensen Huang recently remarked that Marvell could become a $1 trillion company, sending the AI stock soaring.
Investors should consider loading up on Nvidia stock before it breaks out Nvidia's growth was fantastic last quarter, and the good news is that it is poised to step on the gas from the current quarter. Moreover, the company's focus on expanding its AI hardware ecosystem by investing in key infrastructure companies should be a long-term tailwind, especially given that its investments are likely to be profitable.
That's why it would be a good idea to buy Nvidia stock, given its price/earnings-to-growth (PEG) ratio of just 0.69, based on the annual earnings growth it can clock over the next five years, according to Yahoo! Finance. The PEG ratio is a forward-looking valuation metric that considers a company's earnings growth potential, and a reading of below 1 indicates the stock is undervalued.
Nvidia, therefore, seems quite undervalued given its future growth potential. So, it won't be surprising to see it jump significantly in the long run, which is why it makes sense to buy it before it soars higher.
Nvidia (NVDA 0.03%) dominates many headlines about the booming artificial intelligence (AI) market. As the world's largest producer of data center GPUs for training AI algorithms, it's still selling the best picks and shovels for the AI gold rush.
Yet over the past 12 months, an oft-overlooked optical networking stock outperformed Nvidia by a wide margin. That stock was Coherent (COHR +6.65%), which surged more than 400% and crushed Nvidia's near-50% gain. Let's see why the AI tailwinds propelled Coherent's stock higher -- and if it can stay ahead of Nvidia and the other AI leaders.
Image source: Getty Images.
What does Coherent do? Coherent, which was known as II-VI until it acquired the original Coherent and inherited its brand and ticker in 2022, is the world's leading photonics company. It manufactures optical transceivers and components that convert electronic data into light signals, transmit them through fiber-optic cables, and convert them back into accessible data.
In the past, data centers mainly used traditional copper wires to transfer their data between servers. But today, those wires are too slow and generate too much heat to handle the soaring data needs of the expanding cloud infrastructure and AI markets. Those limitations are driving more data center operators to upgrade their networks with Coherent's faster optical devices.
Most of Coherent's revenue comes from its optical business, which has become its core growth engine as the AI market expands. It also produces manufacturing lasers and specialty chips, but those businesses aren't delivering nearly as much growth as its optical business.
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How fast is Coherent growing? In fiscal 2025 (which ended last June), Coherent's revenue rose 23% as data centers upgraded their infrastructure to handle the latest generative AI applications. From fiscal 2025 to fiscal 2028, analysts expect its revenue to grow at a 30% CAGR. They expect its EPS to turn positive in fiscal 2026 and grow at a 52% CAGR over the following two years.
That growth should be driven by its new ultra-fast 800G, 1.6T, and next-generation 3.2T optical technologies. However, Coherent's stock isn't cheap at 63 times its fiscal 2027 earnings (and 51 times its forward adjusted earnings). Nvidia trades at just 22 times its projected earnings for fiscal 2027 (which ends next January) -- but analysts still expect its revenue and EPS to grow at 46% and 45%, respectively, from fiscal 2026 to fiscal 2029.
Coherent's stock soared as it was revalued from a slow-growth optical components and industrial lasers maker into a high-growth AI play. Still, its high valuation could cap its upside potential. While it's still a promising long-term play on the AI-fueled growth of the optical networking market, I think it could underperform Nvidia for the rest of this year.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Coherent and Nvidia. The Motley Fool has a disclosure policy.
Key Takeaways COHR surged 336.6% in a year, then slipped 6.3% in a month as a correction set in.Coherent's datacenter & communications segment was 75% of Q3'26 top line, up 41% y/y.COHR's multi-year NVIDIA pact includes $2B investment and backlog into 2028, but scaling InP lines adds risks. Coherent Corp.’s (COHR - Free Report) stock displayed remarkable growth over the past year. COHR has skyrocketed 336.6%, beating the industry's 11.6% rally and the Zacks S&P 500 Composite’s 28.2% growth.
Over the past year, the company has outpaced its close competitors, Wolfspeed (WOLF - Free Report) and ON Semiconductor (ON - Free Report) . Wolfspeed and ON Semiconductor shares have surged 70.5% and 125.9%, respectively.
1-Year Share Price PerformanceImage Source: Zacks Investment Research
Recent performance shows that Coherent stock dipped 6.3% in a month, signaling that it is going through a correction phase. For the same period, Wolfspeed has declined 3.1%, while ON Semiconductor has gained 9.1%.
Let us analyze the COHR stock to find out whether you should ride the rally, hold or stay away from it.
AI-Backed Demand De-Risks COHR’s Financial OutlookCoherent's primary growth driver has shifted to the datacenter & communications segment, capturing 75% of the top line during the third quarter of fiscal 2026 and gaining 41% from the year-ago quarter. It is beneficial for investors as it de-risks the company’s financial prospects while improving earnings quality.
The stock is trading at a 12-month forward price-to-earnings multiple of 44.83X, which is a premium price compared with the industry’s 22X. While traditionally this premium equity valuation could have affected investors’ interest, it is justified considering Coherent’s ability to convert historically volatile, short-cycle tech-hardware demand into a predictable and long-term source of cash flow. This stream of cash is backed by solid order visibility into calendar year 2028 and long-term agreements extending to the end of the decade.
Image Source: Zacks Investment Research
A drastic surge in asset utilization and supply-chain efficiencies facilitated by a step-function increase to record-high backlogs enhances the company’s operational prowess. It is validated by a 163-basis-point year-over-year expansion in the adjusted operating margin, translating into a 55.9% jump in adjusted net income.
NVIDIA Partnership: Boon to COHR’s Growth SecurityNVIDIA and Coherent entered a multi-year agreement to push the boundaries of advanced optic technologies. Through this partnership, NVIDIA is investing $2 billion in Coherent to aid research and development, future capacity, and operations as the company builds its U.S.-based manufacturing arm.
This news is nothing short of a catalyst for investors because it provides immediate financial validation and long-term growth security. The endorsement from an elite tech giant strengthens COHR’s balance sheet and pushes the narrative that optical technology is vital to AI infrastructure. This partnership deal provides Coherent with a predictable and contracted revenue stream, shielding it from hardware cyclicality.
Importantly, this event has positioned Coherent as a frontrunner of the Co-Packaged Optics transition, exposing investors to a market that is anticipated to see a CAGR of 35.9% through 2031 to $764.3 million (per Mordor Intelligence). This partnership sets Coherent as a long-term beneficiary of NVIDIA’s AI dominance.
Coherent’s Bright Top & Bottom-Line ProspectsThe Zacks Consensus Estimate for COHR’s fiscal 2026 revenues is pegged at $7.1 billion, indicating a 21.5% year-over-year increase. For fiscal 2027, the same is expected to rise 34.4% from the year-ago quarter’s actual. For EPS, the consensus mark is set at $5.48, implying 55.2% year-over-year growth. For fiscal 2027, the bottom line is anticipated to rise 47.6%.
Image Source: Zacks Investment Research
Over the past 60 days, eight and nine EPS estimates for fiscal 2026 and 2027 have been revised upward, respectively, with one downward adjustment for fiscal 2026 and none for fiscal 2027. During the same period, the Zacks Consensus Estimate for fiscal 2026 and 2027 earnings has increased 1.7% and 10.1%, respectively, signaling analyst confidence.
COHR Faces Concentration Risks & Sectoral ImbalanceWhile Coherent derives 75% of its top line from the booming datacenter & communications segment, it poses concentration risks, raising vulnerability to any slowdown or supply congestion. A spending halt within the AI domain can hinder the company’s ability to generate revenues.
In addition to the concentration risks, Coherent’s industrial segment is tackling a massive downturn. In the third quarter of fiscal 2026, revenues in this segment plunged 19.1% year over year. This is not a one-off event since the company has been experiencing this decelerating trajectory over the past few quarters.
Therefore, it is evident that the company is lacking a cushion to fall onto if AI demand slows down, reducing revenue growth rate from the datacenter & communications segment.
Execution Risks of Coherent’s Step-Function BacklogManagement highlighted a step-function increase in backlog in calendar 2028. Although exponential growth must provide a positive impetus to the company’s revenues, it raises execution risks as well. If the company suffers unexpected yield issues, infrastructure constraints, or operational setbacks during the transition from 3-inch to 6-inch indium phosphide manufacturing lines, it could hinder the conversion of this steep backlog efficiently. This could easily result in canceled orders or customer defection.
Verdict: Hold COHR Stock NowCoherent’s bullish trajectory is solidified by explosive growth in its datacenter & communications segment and a $2-billion investment from the NVIDIA partnership, bolstering its ability to raise revenue visibility into 2028.
While the top and bottom-line outlooks appear bright, the company is relying on reaching those milestones on the back of a single segment that generates 75% of revenues, which raises concentration risks. This headwind is further amplified by the execution risks involved in delivering the massive backlog that the company has shouldered.
Ultimately, it appears that COHR is riding through a correction phase. Therefore, we suggest that potential investors remain patient and watch for further share price adjustments before buying.
COHR currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A pair of Nvidia-backed stocks that were among investors' favorite AI names earlier this year, have pulled back lately. JPMorgan analysts see that as an opportunity.
