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Coherent keeps beating earnings estimates while its stock slides further from a 52-week high, and now Wall Street's most bullish analyst has a target that implies shares could nearly double from here.

Coherent (NYSE:COHR | COHR Price Prediction) is priced at $263.23, while the average analyst price target sits at $412.52. The difference points to about 56.7% upside.

Coherent makes lasers, optical transceivers and photonic components. Its Datacenter & Communications division now brings in 79% of revenue. With funding from NVIDIA (NASDAQ:NVDA), which invested $2B, Coherent also joined the S&P 500 during fiscal 2026.

The gap matters because the business keeps speeding up while the stock goes the other way. With implied upside above 40%, Wall Street is saying the market has mispriced one of the main suppliers of AI connectivity.

Record Quarters and Falling Shares Open a Six-Month Disconnect
Most of the decline came in a single week. Coherent fell 21.32% over the past week, including a 9.22% drop in the latest session. That session came right after a hot inflation report drove the 30-year Treasury yield as high as 5.63%. AI infrastructure names fell, a cloud provider falling 16% and a server maker 11%. Rising rates hit capital-hungry suppliers hardest. Coherent spent $1.103B on capex in fiscal 2026 but generated only $79.5M in operating cash flow.

Over six months, shares are down 15.98%, and the stock trades about 40% below its 52-week high of $440. Optics stocks fell on profit taking with no company news behind it. Earlier, a fiber maker’s $2B at-the-market equity offering dragged Coherent 11% lower in sympathy.

Coherent’s own results stayed strong. Coherent has beaten EPS estimates 4 consecutive times. Its latest quarter delivered non-GAAP EPS of $1.74 versus $1.6171 expected, on revenue up 33.7%.

Rosenblatt’s $500 Target Calls for Shares to Nearly Double
Mike Genovese at Rosenblatt Securities holds the highest target on Wall Street at $500.00 with a Buy rating. That target means 89.9% upside. His thesis rests on three things: an AI transceiver super-cycle, production that is sold out well in advance, and margins that expand as manufacturing scale catches up with demand.

Management’s own comments support that view. “Fiscal 27 is basically completely booked out,” the CEO said. Customer orders reach into calendar 28, and long-term agreements run through the end of the decade. Coherent expects its first quarter above $3 billion in revenue by the end of fiscal 2027. Current-quarter guidance calls for revenue of $2.20B to $2.40B and EPS of $1.85 to $2.05.

Analysts are watching specific catalysts. Indium phosphide output is set to double this quarter, one quarter ahead of plan. Co-packaged optics revenue begins ramping in fiscal Q2. Optical circuit switching targets more than $4 billion of addressable market. Management also keeps its gross margin target above 42%.

Of 24 analysts, 4 have it at Strong Buy, 15 at Buy and 5 at Hold, with zero Sells. Bernstein recently started coverage at Outperform (247 Wall St.). Still, targets are estimates and carry no guarantee. The trailing P/E of 68x against a forward P/E of 30x shows how much of the thesis depends on earnings that have yet to arrive.

Fabrinet Carries the Optics Group’s Deepest Discount
The whole peer group sold off together. Coherent’s decline is a sector event.

Lumentum (NASDAQ:LITE) fell 19.33% over the past week but remains up 143.18% year to date. At $896.33 against a $1177.34 target, implied upside is 31.4%, which is smaller than Coherent’s. Coverage is heavily bullish, with 5 Strong Buys, 18 Buys and 4 Holds.

Fabrinet (NYSE:FN) dropped 21.09% for the week and is down 13.69% year to date. At $392.93 against a $734.11 target, it shows 86.8% implied upside. Coverage is lighter, with 3 Strong Buys, 4 Buys and 2 Holds among 9 analysts.

Fabrinet carries the largest consensus upside in the group. Coherent sits in the middle, offering a bigger discount than Lumentum with wider coverage than Fabrinet.

Coherent Still Beats the S&P 500 Despite the Slide
At $263.23, Coherent trades well below the $412.52 consensus target, leaving 56.7% implied upside across 24 covering analysts.

The six-month decline of 15.98% hides a strong year. Shares are up 42.62% year to date, while the S&P 500 has gained 12.86%. Over one year, Coherent is up 140.68%.

Coherent’s Booked Backlog Outweighs the Rate Risk
The bullish case improves if Coherent keeps converting its sold-out backlog into revenue on schedule and gross margin keeps climbing toward 42%. The outlook weakens if long-term rates keep rising, the heavy capex keeps burning cash, or hyperscaler spending cools off before co-packaged optics and optical circuit switching reach scale.

A $3 billion quarter and margin expansion would make the consensus target look conservative. On the risk side, Coherent carries about $3.2B of long-term debt and a beta of 2.113, so every move in rates gets amplified.

Contracted demand into calendar 2028 suggests this selloff reflects a rate and sentiment reset. The stock’s high beta points to continued volatility.

Contact [email protected] for any questions or corrections.

SAXONBURG, Pa., Oct. 14, 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 September 30, 2026, on Wednesday, November 4, 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 ir.coherent.com. 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.

Contact:

Paul Silverstein
Senior VP, Investor Relations
[email protected] 

Lumentum and Coherent both reported blockbuster quarters fueled by AI datacenter demand, with order books stretching years into the future. But a closer look at their backlogs reveals a meaningful gap in quality, and one valuation that may not account…

Lumentum (NASDAQ:LITE | LITE Price Prediction) and Coherent (NYSE:COHR) both reported fiscal 2026 results in August with order books that reach into 2027 and beyond. Lumentum’s quarterly revenue more than doubled to $1.006 billion. Coherent’s grew 33.74% to $2.0455 billion. Both sell into the copper-to-optical shift inside AI datacenters, so the useful question is which backlog has better terms.

Lumentum Runs Short of Lasers While Coherent Books Out 2027
Lumentum’s quarter came down to scarcity. Management said it is “way behind our shipments” on high-power lasers because demand sped up faster than the production ramp. OCS shipments doubled from fiscal Q3, and non-GAAP operating margin reached 36.6%, up 2,160 bps YoY. That kind of margin jump usually means customers are paying up for parts they can’t get anywhere else.

Coherent’s story is variety. Datacenter and Communications brought in $1.615 billion, or 79% of revenue. Management described fiscal 2027 as “basically completely booked out,” with orders reaching into calendar 2028. Industrial revenue of $430.5 million stayed roughly flat, and that drag is one the pure-play rival doesn’t has.

Backlog Driver
Lumentum
Coherent

Visibility
OCS backlog above $400M (as of fiscal Q3), plus a multi-hundred-million CPO order
Orders into 2028, LTAs through end of decade

Contract Terms
Three-year pump laser deals, mostly take-or-pay
Volume plus locked pricing

Main Constraint
High-power lasers and EMLs
Indium phosphide ramp

Q1 FY2027 Revenue Guide
$1.225B to $1.275B
$2.2B to $2.4B

Focused Firepower Meets Portfolio Scale
Lumentum’s demand comes from a small group of buyers: tier-one hyperscalers, a lead CPO customer, and an OCS customer that keeps an internal supply source. Lumentum CEO Michael Hurlston still expects the company to become the “number one supplier” of OCS in early 2027. He said Lumentum repriced its backlog “a little bit,” so more pricing increases could still come through.

Coherent is spending heavily. Quarterly capex rose to $556 million from $131 million a year earlier, much of it for 6-inch indium phosphide lines that deliver four times the output of a 3-inch wafer at half the cost. Its LTAs lock in pricing for the full term. That protects volume, but it could cap the upside if laser prices keep climbing.

CPO Timing Will Show Whose Backlog Holds Up Better
Coherent expects CPO revenue to start in fiscal Q2. Lumentum projects ultra-high-power laser demand ramping in the second half of calendar 2027. The focus will be on whether Coherent’s PhotonLink platform wins full-solution designs, and whether Lumentum’s Greensboro fab signs customer funding before first revenue in early 2028. Monday’s drop, with LITE down 9.78% and COHR down 7.88%, shows how quickly sentiment can turn. Both names sit firmly in the AI infrastructure trade that goes beyond the chipmakers, the same group we profiled in a free report on seven suppliers powering the data-center buildout.

Why Lumentum’s Backlog Looks Stronger, With a Valuation Caveat
To me, Lumentum’s backlog looks like the higher-quality one. Its products are scarcer, its margins are growing faster, and it forecast to a 39.5% to 40.5% operating margin. That quality comes at a price: roughly 43x forward earnings, compared with 30x for Coherent. Coherent offers more scale, U.S. manufacturing and contracted pricing. That view would change if Lumentum’s OCS customer moves more supply in-house sooner than expected.

Contact [email protected] for any questions or corrections.

Lumentum's order book is booked solid through early 2029, yet its stock is leading the entire AI optics sector lower today. When the most visible demand story in the group takes the hardest hit, something worth watching is happening inside…

Lumentum (NASDAQ:LITE | LITE Price Prediction) stock is down 10% to $996.95 in midday trading, leading a sharp retreat across artificial intelligence (AI) optical connectivity names. This drop stands out because Lumentum’s production capacity is spoken for through early 2029, and that combination of the deepest decline with the longest order visibility frames the selloff.

For an optics/photonics sector check, the Roundhill Photonics & Optics ETF (CBOE:LYTE) is down 7% to $23.11. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is essentially flat at $778.75, so the damage is staying inside one corner of the market. A 7% slide in the optical fund against a flat benchmark marks this as a group-specific selloff.

Meanwhile, Applied Optoelectronics (NASDAQ:AAOI) stock is down 7% to $101.50, falling less than Lumentum stock has. Additionally, Coherent (NYSE:COHR) stock is down 7% to $289.68, tracking Applied Optoelectronics stock almost step for step. All three had ranked among the strongest AI infrastructure winners heading into the decline.

A Sold-Out Order Book Meets Group Selling None of the three companies has issued a new press release ahead of the decline. That leaves selling spread across the whole optical group. These are the same AI expansion suppliers we profiled in a free report on seven non-chipmakers powering the boom, with the three stocks and the fund dropping in together. The slide in Lumentum stock is the steepest of the group, which makes it the clearest gauge of how hard the selling is landing.

On October 9, Lumentum’s chief executive said the company’s AI optical components are booked through early 2029, and the optical names rose that day. Coverage framed that rally around Lumentum being unable to keep up with AI demand (Barron’s). Those remarks are three days old and aren’t the cause of the current decline.

What the Peer Group Says About Lumentum As of its August 6 fact sheet, the Roundhill fund held Lumentum at 15.4% and Coherent at 15.2% of net assets, with Applied Optoelectronics at 2.1%. The fund and three stocks fell within a narrow range. The pattern points to group-level selling that hits every name regardless of its individual story.

Lumentum’s risk is that a stock up 170% year to date gives back the most when the group turns. At a forward P/E ratio of 43x, Lumentum stock carries little margin, and a full order book doesn’t protect a multiple. Lumentum shares also sit well above the 200-day moving average of $764.19, a sign of how far the run extended.

A bullish reading starts from an unchanged demand picture since October 9, because a sold-out order book signals demand running ahead of supply. Lumentum hosted its August 11 earnings call. On the call, Lumentum’s chief executive stated, “Pumped laser shipments surged more than 80% year over year, and we will remain effectively sold out for the foreseeable future, despite our rapid capacity expansion.” Management also said Lumentum reached its target operating model more than a quarter ahead of schedule.

What to Watch Next The key question for Lumentum is whether its booked capacity turns into reported revenue on schedule. Lumentum guided for current-quarter revenue of $1.225 billion to $1.275 billion after posting $1.006 billion last quarter, up 109.3% year over year. Hitting that range could show the order book translating into results on time.

The 10% drop in Lumentum stock shows how fast the optical names can reverse together, even with demand intact. Investors should hold small enough stakes that a group-wide decline stays within their risk tolerance.

Contact [email protected] for any questions or corrections.

Key Takeaways Coherent shares gained 8% in a month as AI infrastructure demand strengthens its optical-networking outlook.Coherent is ramping 1.6T transceivers, while 800G demand and subsystem opportunities broaden growth avenues.COHR has fiscal 2027 demand strongly committed, with customer purchase orders extending into calendar 2028. Coherent Corp. (COHR - Free Report) has emerged as a major beneficiary of the artificial intelligence infrastructure boom. The stock has surged 190% over the past year and gained another 8% in the past month, significantly outperforming its industry and the broader market.

Despite the sharp rally, the investment case remains supported by accelerating optical-connectivity demand, expanding manufacturing capacity and Coherent’s growing role in higher-value optical systems.

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AI Infrastructure Offers a Long Growth RunwayThe AI opportunity extends well beyond the construction of new data centers. Existing facilities must continually upgrade as newer GPUs, switches and networking platforms require greater bandwidth. As AI clusters expand, more connections are needed among processors, racks, switches and facilities, increasing the importance of high-speed optical networking.

This trend plays directly into Coherent’s strengths. Its portfolio includes indium phosphide lasers, VCSELs, silicon photonics, specialty fiber, detectors and micro-optics. That broad technological base gives the company multiple ways to benefit as data-center operators shift toward faster, denser and more power-efficient network architectures.

Continued improvements in AI models, falling inference costs and broader commercial adoption could further stimulate computing requirements. As AI becomes embedded in more applications, network capacity should become increasingly critical alongside computing power.

PhotonLink Expands Coherent’s Value PropositionPhotonLink could strengthen Coherent’s position by moving the company further beyond individual components and into integrated optical subsystems. Combining internally developed technologies with integration, assembly and testing capabilities enables the company to capture a greater portion of the value created within an AI system.

This approach could also deepen customer relationships. Replacing a single component supplier is generally simpler than switching a provider whose subsystem has been designed and qualified within a broader architecture.

Coherent is also positioned across multiple technology pathways, including conventional pluggable optics, co-packaged optics, near-packaged optics and chip-to-chip connectivity. This diversified exposure reduces dependence on any single optical architecture becoming the dominant industry standard.

High-Speed Product Ramps Strengthen Near-Term ProspectsCoherent’s immediate earnings momentum should primarily come from products already entering large-scale production. The 1.6T transceiver ramp is particularly important, while demand for 800G products continues to expand. Co-packaged optics, optical circuit switching and Multi Rail technologies provide additional avenues for growth as AI networks become more complex.

Demand visibility is another encouraging factor. Fiscal 2027 requirements are already strongly committed, while customer purchase orders extend into calendar 2028. Longer-term agreements stretch further into the decade, with some incorporating minimum purchasing commitments and predetermined pricing.

The bigger challenge appears to be satisfying demand. Coherent increased InP laser production by nearly 80% year over year during the June quarter and continues to expand six-inch InP capacity. Higher yields from six-inch wafers could also improve manufacturing economics as volumes rise.

Earnings Momentum Supports the Investment CaseThe Zacks Consensus Estimate projects fiscal 2027 revenues of $10.68 billion, indicating 50% year-over-year growth. Revenues are expected to advance another 35% in fiscal 2028.

Profit expectations are similarly robust. Fiscal 2027 EPS is projected at $9.38, indicating 67.2% growth, followed by another 46% increase in fiscal 2028. These estimates suggest that rising AI exposure, greater manufacturing utilization and operating leverage could translate strong demand into accelerating profitability.

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COHR trades at roughly 32.06 times forward earnings compared with the industry’s 20.77 times. The premium is considerable, but Coherent increasingly looks different from the more cyclical hardware supplier of the past. Greater revenue visibility, stronger margins, long-term customer commitments and improving cash generation provide greater support for the valuation.

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Two U.S.-Listed Peers to WatchLumentum Holdings (LITE - Free Report) is a relevant optical-networking peer with significant exposure to cloud and data-center connectivity. Lumentum Holdings competes in high-speed optical components and related technologies, making it sensitive to many of the AI-driven bandwidth trends supporting COHR. Lumentum Holdings therefore provides investors with another way to gauge demand across the rapidly evolving optical-networking market.

Applied Optoelectronics (AAOI - Free Report) is another U.S.-listed peer tied closely to data-center optics. Applied Optoelectronics benefits from demand for higher-speed optical products used by hyperscale customers, linking its growth prospects to expanding data-center investment. Applied Optoelectronics is therefore a useful comparison when assessing how effectively optical suppliers are converting AI infrastructure spending into revenue growth and stronger profitability.

Is COHR Stock a Buy?Coherent appears well positioned to remain a compelling buy as AI infrastructure spending expands and optical networking becomes more critical to next-generation data centers. Demand visibility, rising high-speed transceiver volumes, broader subsystem exposure and improving manufacturing efficiency strengthen the earnings outlook. The company also benefits from a deeper role in customer architectures, which can support stickier relationships and better margins. Valuation is elevated, but the premium looks increasingly supported by faster growth, stronger profitability and long-term customer commitments. For investors willing to tolerate volatility after the rally, Coherent still offers an attractive way to participate in the AI infrastructure buildout.

COHR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

It doesn't matter if you're a growth, value, income, or momentum-focused investor -- building a successful investment portfolio takes skill, research, and a little bit of luck.

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What is the Zacks Rank?A unique, proprietary stock-rating model, the Zacks Rank uses earnings estimate revisions, or changes to a company's earnings expectations, to help investors create a winning portfolio.

There are four main factors behind the Zacks Rank: Agreement, Magnitude, Upside, and Surprise.

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The Power of Institutional InvestorsThe Zacks Rank also allows individual investors, or retail investors, to benefit from the power of institutional investors.

Institutional investors are the professionals who manage the trillions of dollars invested in mutual funds, investment banks, and hedge funds. Studies have shown that these investors can and do move the market due to the large amounts of money they invest with. Because of this, the market tends to move in the same direction as institutional investors.

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Let's take a look at Coherent (COHR - Free Report) , which was added to the Zacks Rank #1 list on October 1, 2026. Coherent Corp. is a vertically integrated manufacturer of lasers, transceivers, optoelectronic devices and modules and engineered materials that serve communications, industrial, instrumentation and electronics markets. Headquartered in Saxonburg, PA, it operates globally across the United States, Europe and Asia. The company applies photonics and materials science across high-performance applications in datacenter, communications, industrial, semiconductor, display and other markets.

10 analysts revised their earnings estimate higher in the last 60 days for fiscal 2027, while the Zacks Consensus Estimate has increased $1 to $9.38 per share. COHR also boasts an average earnings surprise of 6.2%.

Earnings are expected to grow 67.2% for the current fiscal year, while revenue is projected to increase 50%.

COHR has been moving higher over the past four weeks as well, up 7.1% compared to the S&P 500's loss of 0.4%.

Bottom LineWith a #1 (Strong Buy) ranking, positive trend in earnings estimate revisions, and strong market momentum, Coherent should be on investors' shortlist.

If you want even more information on the Zacks Ranks, or one of our many other investing strategies, check out the Zacks Education home page.

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Key Takeaways Palantir's commercial AI growth, margins and cash generation strengthen its investment case.Coherent benefits from surging AI datacenter demand but faces hyperscaler and execution risks.Palantir's sales and EPS are projected to grow about 83% and 115% year over year, respectively. Both Palantir Technologies Inc. (PLTR - Free Report) and Coherent Corp. (COHR - Free Report) are major players in the AI and data infrastructure space.

Palantir is a leading provider of enterprise-level artificial intelligence software, specializing in data integration, large-scale analytics, machine learning operations and decision-making platforms. Its core platforms — Palantir Gotham, Foundry and Artificial Intelligence Platform — are specifically built to empower organizations in both government and commercial sectors to harness the power of their data through real-time decision intelligence and AI-driven operations.

Coherent is a critical supplier of optical and semiconductor technologies, with increasing relevance in AI hardware infrastructure. Its products include high-speed optical transceivers, lasers, compound semiconductors and advanced substrates, all of which are essential for the high-bandwidth, low-latency data transmission required in AI-centric applications such as data centers, autonomous systems and edge computing.

PLTR: Commercial AI Momentum, Strong ProfitabilityPalantir’s commercial business is emerging as its powerful future growth driver as enterprises accelerate artificial intelligence adoption. Commercial revenues are approaching half of total sales, supported by customers moving beyond pilot programs toward mission-critical deployments. The company’s Artificial Intelligence Platform is helping organizations connect models with proprietary data, workflows and operational decisions, strengthening its value across business functions. Larger contract sizes indicate deeper engagement and rising spending among existing clients. That suggests Palantir is building durable relationships rather than relying on customer acquisition. With U.S. operations generating more than four-fifths of revenues, exceptionally strong domestic demand should continue to support scale, recurring expansion and a widening competitive position in enterprise AI software.

Palantir’s exceptional margins and cash generation strengthen the bullish case by showing that rapid growth is translating into high-quality earnings. An adjusted gross margin in the mid-80% range in the second quarter of 2026 underscores the scalability of its software model, while an adjusted operating margin above 60% demonstrates significant operating leverage. Free cash flow also exceeded $1.2 billion in the quarter, highlighting the company’s ability to convert rising demand into substantial liquidity. Its $9.2 billion cash and short-term Treasury position provides flexibility to invest in product development, expand delivery capacity and pursue strategic opportunities without pressuring the balance sheet.

Although cloud-hosting responsibilities created modest gross-margin pressure, faster implementation and deeper customer relationships could outweigh that near-term effect. Overall, PLTR’s profitability profile supports sustained, self-funded expansion.

COHR: AI-Centric Portfolio, Strong ProfitabilityCOHR’s business mix has shifted decisively toward artificial intelligence infrastructure and optical connectivity. Datacenter & Communications generated nearly 79% of fourth-quarter fiscal 2026 revenues, up from roughly 67% a year earlier, as segment sales surged 58.6% year over year to $1.6 billion. Demand for high-speed transceivers, optical circuit switching, co-packaged optics, multi-rail systems and PhotonLink solutions should support further expansion as datacenter operators upgrade network capacity. Demand visibility extending into calendar 2028 and long-term agreements running through the decade provide additional confidence.

However, this rapid transformation has increased COHR’s dependence on hyperscaler capital spending and timely customer deployments. Industrial revenues declined 15.8% year over year to $430.5 million, offering limited diversification against a datacenter slowdown. Therefore, while AI infrastructure represents a compelling multiyear opportunity, COHR’s performance is becoming increasingly sensitive to datacenter investment cycles, customer concentration and execution within its optical-connectivity operations.

COHR’s profitability trends indicate that its strong revenue growth is translating into better operating leverage. Fiscal fourth-quarter GAAP gross margin increased 277 basis points year over year to 38.5%, while adjusted gross margin expanded 215 basis points to 40.2%. Adjusted operating margin advanced 381 basis points to 21.8%, supported by higher manufacturing yields, lower input costs, pricing actions and a more favorable product mix. Adjusted operating income grew 62.1%, significantly faster than the 33.8% increase in revenues, demonstrating improved cost absorption and operating efficiency. The midpoint of first-quarter fiscal 2027 adjusted gross-margin guidance stands at 40.5%, suggesting that profitability can remain resilient as production scales.

Nevertheless, maintaining these gains will require continued yield improvements and disciplined capacity execution. A larger contribution from advanced optical products should strengthen margins, but manufacturing inefficiencies or unfavorable pricing could offset the benefits. Sustained margin expansion would confirm that COHR’s AI-led growth is creating durable economic value rather than merely increasing business volume.

How Do Zacks Estimates Compare for PLTR & COHR?The Zacks Consensus Estimate for Palantir’s current-year sales and EPS indicates year-over-year growth of about 83% and 115%, respectively. This indicates a solid performance trajectory, with EPS estimates trending upward over the past 60 days, signaling increased optimism from analysts about Palantir’s continued profitability and operational leverage, particularly as demand for its AI-driven platforms accelerates.

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In comparison, Coherent’s current-year sales are projected to grow about 50% year over year, a notable figure though more modest than Palantir’s top-line growth. EPS is expected to rise about 67% year over year. Like Palantir, EPS estimates for Coherent have also been trending higher over the past 60 days, reflecting growing confidence in its profitability, particularly amid the AI-fueled surge in demand for high-speed optical components and data center infrastructure.

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Coherent’s Valuation More Attractive Than PalantirCOHR is currently trading at a forward 12-month P/S ratio of 4.76X, which is below its 12-month median of 5.28X. In contrast, PLTR holds a much higher forward 12-month P/S ratio of 41.83X, though still below its median of 42.99X. Coherent appears far more attractively priced from a valuation standpoint.

Palantir is the Better BuyBoth Palantir and Coherent are well positioned to benefit from expanding artificial intelligence adoption, but Palantir appears better placed at present. Its accelerating commercial momentum, highly scalable software model, strong profitability and robust cash generation provide a compelling combination of growth and financial strength. Coherent offers attractive exposure to AI infrastructure and carries a more reasonable valuation, but its greater sensitivity to hyperscaler spending, manufacturing execution and datacenter investment cycles adds risk. Palantir’s stronger earnings growth outlook, improving analyst sentiment and higher Zacks Rank further reinforce its investment appeal, making PLTR the better buy of the two stocks currently.

While PLTR sports a Zacks Rank #1 (Strong Buy), COHR carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Goldman Sachs sees hyperscalers accelerating toward a spending level that dwarfs anything the tech industry has attempted before, and the companies positioned to profit most may have nothing to do with the chips getting all the attention.

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Artificial intelligence has moved beyond a technology spending cycle and into an infrastructure buildout measured in trillions of dollars. Goldman Sachs estimates that the five largest hyperscalers will spend about $800 billion on capital expenditures in 2026, up 94% from 2025. More importantly, that spending isn’t expected to fall. The growth rate is simply coming down from an extraordinary surge.

Goldman projects hyperscaler capex will reach $1.2 trillion in 2027 and $1.4 trillion in 2028. That changes the investment opportunity. The first AI boom rewarded companies selling the processors. The next stage could reward the businesses supplying everything required to keep those processors running.

The AI Spending Boom Is Getting Bigger To put those numbers in perspective, the five largest hyperscalers went from roughly $150 billion of annual spending in 2023 to an estimated $800 billion in 2026. By 2028, Goldman expects that figure to reach $1.4 trillion.

The additional $200 billion expected in 2028 alone is almost as much as these companies spent during all of 2024. And the $1.2 trillion projected for 2027 exceeds their combined spending from 2023 through 2025.

This isn’t an AI infrastructure cycle running out of gas. It’s beginning to look more like a city being built around a gold mine — and the next fortunes may belong to the companies supplying the roads, electricity, and buildings.

The first AI boom rewarded companies selling the processors. Now that has become the easy part. The harder effort is supplying the electricity, networking, cooling, memory, and physical infrastructure required to turn those chips into productive computing capacity.

Goldman Sachs’ Global Institute and Global Investment Research estimate roughly $7.6 trillion will be invested in AI infrastructure from 2026 through 2031, covering compute, data centers, and power. Its baseline model reaches $1.6 trillion of annual AI capex by 2031.

Forget the chips—the real AI fortune is being built in the power grids and cooling systems of a $7.6 trillion infrastructure revolution. The Bottleneck Is Moving Beyond GPUs The obvious AI winners have been chip companies. But a GPU sitting in a warehouse produces exactly zero AI revenue.

It needs networking, memory, optical connections, cooling, electrical equipment, buildings, and enormous amounts of electricity. President Trump called it “the oil of the next 50 years.”

The International Energy Agency expects global data-center electricity consumption to roughly double from 485 terawatt-hours in 2025 to 950 TWh in 2030. Electricity consumption at AI-focused data centers is projected to triple.

That creates a different roadmap for investors. The first AI spending wave was dominated by computing power. The next one is likely to be shaped by three bottlenecks that become harder to ignore as hyperscalers deploy hundreds of billions of dollars more each year.

AI Bottleneck Sector Leaders Why They Matter Memory Micron (NASDAQ:MU | MU Price Prediction), SK hynix (NASDAQ:SKHY), Sandisk (NASDAQ:SNDK) AI accelerators require enormous amounts of high-bandwidth memory, while expanding data centers also need storage. Networking & Optics Broadcom (NASDAQ:AVGO), Arista Networks (NYSE:ANET), Coherent (NYSE:COHR) As AI clusters grow, moving data between thousands of processors becomes as important as processing it. Networking chips, switches, optical transceivers, and lasers provide the connections. Power & Electrical Infrastructure Eaton (NYSE:ETN), GE Vernova (NYSE:GEV), Vertiv (NYSE:VRT) Every new AI cluster needs electricity, power distribution, transformers, cooling, and other equipment before a single GPU can do useful work. There are other ways to play the buildout, including energy storage, power generation, and data-center construction, but investors don’t need to look far beyond these three bottlenecks to find where the next wave of AI infrastructure spending is likely to flow.

The IEA also says supply chains for gas turbines, transformers, advanced chips, and IT components have tightened as data-center projects expand.

That’s the key point: AI increasingly needs the physical economy.

Follow the Money Into the Physical Economy Goldman Sachs says strong demand and constrained supply have already pushed memory producers’ gross margins to roughly 80%, more than twice their historical average. That also illustrates the risk: today’s bottleneck profits can attract tomorrow’s capacity.

Granted, investors shouldn’t assume every AI infrastructure stock will prosper. Goldman notes that slower capex growth will eventually meet rising depreciation expenses, potentially reducing AI’s contribution to S&P 500 earnings.

Key Takeaway In short, the AI trade is getting wider, not ending. The numbers point toward $1.4 trillion of annual hyperscaler spending by 2028 and $7.6 trillion of cumulative AI infrastructure investment through 2031.

Smart investors don’t have to chase every GPU cycle. The more durable opportunity may be owning companies that sell the electricity, cooling, networking, memory, and electrical equipment that $1.4 trillion of annual spending cannot avoid.

Contact [email protected] for any questions or corrections.

Key Takeaways Coherent is benefiting from AI datacenter demand and a strategic NVIDIA partnership through 2030.Coherent expects fiscal 2027 first-quarter revenue to reach $2.2-$2.4 billion, up 45.6% year over year.Cerebras' core revenue jumped 103%, while its data center capacity exceeds 600 megawatts. The technology services industry is mature, with demand for services in good shape. The global shift toward digitization creates opportunities in various markets, including 5G and artificial intelligence (AI). Companies are adopting generative AI, agentic AI, machine learning (ML) and data science faster to gain a competitive advantage. 

However, this space has lost momentum in 2026 due to several macroeconomic concerns and geopolitical conflicts. Despite these headwinds, we have narrowed our search to two AI-led technology services stocks with a favorable Zacks Rank that have shown northward movement in the volatile past month. 

The companies are: Coherent Corp. (COHR - Free Report) and Cerebras Systems Inc. (CBRS - Free Report) . Each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our two picks in the past month.

Image Source: Zacks Investment Research

Coherent Corp.Coherent sits at the center of the AI optics buildout, with strong demand visibility supported by long-term agreements. COHR is positioned at the heart of the AI datacenter build-out, which has driven sustained strength in Datacenter and Communications. 

COHR provides highly scalable datacom transceivers, Co-Packaged Optics solutions, and high-speed VCSELs engineered to boost data center bandwidth. COHR is widening its datacenter opportunity through optical circuit switching (OCS), co-packaged optics (CPO)/ near-packaged optics (NPO), multi-rail and thermal solutions. OCS already contributes to revenues.

COHR and NVIDIA Corp. (NVDA - Free Report) entered into a strategic partnership focusing on next-generation optical technology and silicon photonics for AI data centers. NVDA will invest $2 billion in COHR for a multiyear agreement up to 2030.

Strong OutlookFor the first quarter of fiscal 2027, Coherent expects revenues of $2.2 billion to $2.4 billion. The $2.3 billion midpoint implies approximately 12.4% sequential growth and about 45.6% growth from first-quarter fiscal 2026 revenues of $1.58 billion. Guidance established a credible path toward a quarterly revenue run rate above $3 billion by the fiscal 2027 end.

The company expects an adjusted gross margin of 39-41.5%. Its 40.5% midpoint would represent a modest 30-basis-point sequential improvement. Projected adjusted EPS of $1.85-$2.05 implies midpoint growth of 12.1% from the fiscal fourth quarter and approximately 68% year over year.

Solid Estimate RevisionsCoherent has an expected revenue and earnings growth rate of 50% and 67.2%, respectively, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 11.9% in the last 60 days.

COHR has an expected revenue and earnings growth rate of 35% and 46.1%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 0.4% in the last 30 days.

Image Source: Zacks Investment Research

Robust Price Upside PotentialThe short-term average price target of brokerage firms represents an increase of 29% from the last closing price of $321.52. The brokerage target price is currently in the range of $280-$500. This indicates a maximum upside of 55.5% and a downside of 12.9%.

Cerebras Systems Inc.Cerebras Systems’ wafer-scale design continues to address chip-to-chip communication and memory bottlenecks in AI inference. CBRS’ WSE-3 avoids HBM, CoWoS packaging and 3-nanometer fabrication, reducing exposure to components that management says remain supply constrained.  

Cerebras’ relationships with OpenAI, Amazon.com Inc. (AMZN - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) are expanding its role in high-speed inference. Remaining performance obligations (RPO) reached $25.4 billion as of June 30, 2026.

CBRS is shifting toward a recurring AI infrastructure model as cloud adoption expands. In second-quarter 2026, core revenues jumped 103% year over year to $209.9 million, while core cloud and other services revenues increased 287% to $127.7 million. Hardware revenues grew 17% year over year to $82.1 million.

Strong OutlookFor the third quarter of 2026, CBRS expects core revenues to be in the range of  $214-$216 million. Core gross margin is projected between 38% and 40%, while core operating margin is expected between negative 25% and negative 23%.

For 2026, CBRS raised core revenue guidance to $880-$890 million. Core gross margin is expected to be 41-43%, while core operating margin is projected between negative 19% and negative 17%. Management expects core revenues to more than triple in 2027.

Cerebras has secured more than 600 megawatts of data center capacity that is either live or under contract for delivery by the end of 2027. Its pipeline of additional data center opportunities is measured in gigawatts, as available capacity remains a key constraint on revenue growth. Manufacturing capacity is expected to increase more than tenfold in 2026.

Solid Estimate RevisionsCerebras has an expected revenue and earnings growth rate of more than 100% each, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 29.2% in the last 60 days.

Image Source: Zacks Investment Research

Robust Price Upside PotentialThe short-term average price target of brokerage firms represents an increase of 38.5% from the last closing price of $208.49. The brokerage target price is currently in the range of $209-$330. This indicates a maximum upside of 58.3% and no downside. 

SAXONBURG, Pa., Sept. 21, 2026 (GLOBE NEWSWIRE) -- Coherent Corp. (NYSE: COHR), the global leader in photonics, today announced PhotonLink™, an integrated optics platform that brings together Coherent’s broad portfolio of critical photonics technologies, precision assembly and test capabilities to deliver complete optical solutions for next-generation AI datacenters. The platform supports co-packaged optics (CPO), near-packaged optics (NPO) and emerging chip to chip connectivity.

As AI systems continue to scale, demand for higher bandwidth and lower power is driving optical connectivity closer to compute and switching silicon. These architectures require lasers, silicon photonics, precision optics, fibers and detectors to work together. PhotonLink brings those technologies and the expertise to integrate them into one platform.

“The next leap in AI requires more than faster chips – it requires a new way to connect them,” said Jim Anderson, Chief Executive Officer at Coherent. “Customers need complete optical solutions, not just individual components. Coherent is uniquely positioned to bring together the critical technologies, integrate and test the finished assemblies, and manufacture them at scale. PhotonLink puts that capability to work for the next generation of AI infrastructure.”

Coherent’s vertical integration spans compound semiconductor materials, lasers, optics and specialty fiber through final assembly and test. PhotonLink gives customers access to both individual components and complete optical assemblies from one partner, helping simplify system design, streamline qualification and reduce the complexity of integrating technologies from multiple suppliers.

FROM CRITICAL TECHNOLOGIES TO COMPLETE OPTICAL ASSEMBLIES

The PhotonLink platform spans four functions of the optical path: Generate, Shape, Guide and Receive. The portfolio includes indium phosphide (InP) lasers, vertical-cavity surface-emitting laser (VCSEL) arrays, silicon photonics, isolators, specialty fibers, micro-optics and detectors. Coherent integrates these technologies into external laser sources, precision fiber assemblies and optical modules tailored to customer architectures.

CUSTOMER ENGAGEMENT AND MANUFACTURING SCALE

Coherent has more than ten CPO customer engagements and more than ten NPO engagements, with anchor customers and long-term agreements secured for both architectures. The company also has more than five engagements in emerging chip to chip connectivity. Revenue from the PhotonLink platform is expected to begin ramping in Q4 of CY2026.

PhotonLink builds on Coherent’s established datacenter manufacturing base, which has shipped more than 300 million InP lasers and more than one billion InP and gallium arsenide (GaAs) photodetectors. Coherent is expanding its 6” InP and specialty fiber manufacturing capacity to support the PhotonLink ramp.

PHOTONLINK AT ECOC 2026
Coherent hosted a PhotonLink launch event on September 21 at the Gran Hotel Miramar in Málaga during the European Conference on Optical Communication (ECOC) 2026. The presentation and webcast recording are available at PHOTONLINK™ Launch webcast

Visitors to ECOC 2026 can also meet Coherent experts and explore PhotonLink at Stand 2100, Hall 2, at FYCMA - Trade Fair & Congress Center in Málaga, Spain.

For more information about PhotonLink, visit https://www.coherent.com/datacenter-communications/photonlink

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, visit coherent.com.

Media Contact: 
[email protected] 

SAXONBURG, Pa., Sept. 20, 2026 (GLOBE NEWSWIRE) -- Coherent Corp. (NYSE: COHR), the global leader in photonics, today announced new optical technologies and live demonstrations designed to help customers scale AI infrastructure at the European Conference on Optical Communication (ECOC) 2026 in Málaga, Spain.

At Stand 2100, Hall 2, Coherent will showcase innovations spanning AI datacenter connectivity, co-packaged optics (CPO) and near-packaged optics (NPO), next-generation pluggable transceivers, optical transport, specialty fibers, optical circuit switching, advanced materials, and thermal management addressing rising power density.

PhotonLink™, a new integrated optics platforms which brings together Coherent’s critical optical technologies and integration capabilities to support CPO, NPO and emerging chip to chip connectivity. The platform combines components and complete optical assemblies with manufacturing at scale. Additional details about PhotonLink will be announced separately.

"Scaling AI infrastructure requires more than bandwidth – it requires solving power, integration and thermal challenges together,” said Dr. Sanjai Parthasarathi, Chief Marketing Officer at Coherent. "At ECOC, we are demonstrating how Coherent’s expertise across materials, components and optical systems helps customers address those challenges – from connections near compute to links between datacenters.”

FEATURED TECHNOLOGY DEMONSTRATIONS

Coherent's demonstrations illustrate how its vertical integration across materials, devices, components, modules and systems supports different AI connectivity architectures including scale-across, scale-out, scale-up and chip to chip. Highlights include:

3.2T 2xDR4 Transceiver in an OSFP-Size Package
Coherent will demonstrate a compact 3.2T pluggable architecture with dual 1.6T optical paths in an OSFP-size package. The technology demonstration incorporates eight 425G PAM4 line-side optical lanes, Coherent Differential EMLs and Coherent photodiodes, highlighting progress toward next-generation 400G-per-lane optical connectivity.

6.4T NPO Optical Engine
A 6.4T NPO demonstration will showcase a compact and power-efficient optical engine for high-density AI Scale-Up and Scale-Out fabrics. The demonstration brings together silicon photonics, fiber attach technology, ELSFPs, and Coherent laser technology to illustrate the advantages of vertical integration across critical optical interfaces.

VCSEL-Based Optics for AI Scale-Up
Coherent will demonstrate high-density 2D VCSEL and photodiode arrays for highly parallel optical architectures in CPO and NPO low latency connectivity.

Full C-Band Pluggable Optical Line System
For DCI and Scale-Across applications, Coherent will showcase its LS200 full C-band pluggable optical line system for datacenter interconnect and transport applications. The compact architecture brings pluggable line-system functionality closer to the router or switch while supporting flexible point-to-point optical transport.

OPTICAL COMPONENTS, ASSEMBLIES AND MODULES

Coherent will also showcase new products and emerging technologies across its optical networking portfolio, including:

FlexConnect
A detachable fiber array unit connector for CPO applications designed to simplify assembly and maintenance, with repeatable plug-unplug performance, interchangeability and an epoxy-free optical path compatible with high-power lasers.OptiAlign
A high-precision fiber array unit for CPO applications designed to support precise pitch control and high fiber-channel counts. Coherent combines an internally developed V-groove with customized fiber dimensions to address demanding optical alignment requirements.OptiFocus
A two-in-one coupling lens design for ELS, intended to simplify optical assembly while providing high coupling efficiency.FiberPack
A passive fiber assembly kit for scale-up and scale-out architectures that integrates fiber attach, micro-lens, tray, and termination technologies, drawing on Coherent’s vertically integrated optical-components manufacturing.OptiPolar Array X
A multi-channel Polarization Beam Splitter Array in a super-compact form factor based on glass material optimized for multi-lane systems.2D micro-VCSEL and PD array
High Density 2D Array of individually addressable emitters and PD array with integrated lenses designed for flip chip bonding in NPO or CPO architectures.Specialty Fibers
Tight geometry-controlled Polarization Maintaining Fiber; Mode-Matched Fiber for improved coupling efficiency into edge-coupled silicon photonics; and multi-core fiber for high-density AI datacenter solutions. Ultra-High-Power (UHP) CW laser
Enabled by a proprietary design and advanced manufacturing processes, this ultra-high-power continuous-wave (CW) laser delivers high spectral stability, narrow linewidth, and low relative intensity noise (RIN) across its full operating range. Pluggable Optical Line System (POLS)
A full C-band optical line system with a high-power, variable-gain amplifier in a compact QSFP form factor. Designed for 800G ZR/ZR+ digital coherent optics, it supports up to 32 DWDM wavelengths over a single fiber pair, carrying up to 25.6Tbps across links from 2km to 200km. THERMAL MANAGEMENT FOR HIGH DENSITY AI INFRASTRUCTURE

Coherent will also showcase Thermadite™ materials, diamond-based solutions and other advanced materials and components designed to address the growing power density and cooling requirements of AI infrastructure.

PARTNER AND QUANTUM TECHNOLOGY DEMONSTRATIONS

Coherent will participate in OIF interoperability and, separately, demonstrate quantum technologies for networking and encryption applications with industry partners.

With Quside, Coherent will demonstrate quantum random number generation for encryption applications using live quantum entropy alongside Coherent optical connectivity. With CUbIQ, Coherent will participate in a quantum key distribution demonstration in a compact pluggable architecture.

INDUSTRY THOUGHT LEADERSHIP AT ECOC 2026

Coherent executives and technology experts will contribute to Market Focus sessions and the ECOC technical program, covering AI datacenter infrastructure, CPO, optical interconnect scaling, advanced materials, coherent-lite optics and satellite connectivity.

MARKET FOCUS

Monday, September 21, 2026

Cooling Smarter: How Advanced Materials Unlock Datacenter Efficiency
Speaker: Dr. Sanjai Parthasarathi
11:40 a.m. - 11:55 a.m.

Panel: Modules and Subsystems
Co-Chair: Dr. Sanjai Parthasarathi
1:00 p.m. - 5:00 p.m.

Beyond 1.6T: Enabling AI Datacenter Scale with Coherent-Lite Optics
Speaker: Shawn Esser
3:20 p.m. - 3:35 p.m.

Tuesday, September 22, 2026

Scaling the Optical Future: Technologies Enabling Scale-Up, Scale-Out, and Scale-Across AI Infrastructure
Speaker: Dr. Julie Sheridan Eng
10:00 a.m. - 10:15 a.m.

Co-Packaged Optics: From Industry Promise to Reality
Speaker: Justin Abbott
11:00 a.m. - 11:15 a.m.

Fireside Chat on the Increasing Role of Photonics in Next-Generation AI/ML Interconnects
Speaker: Dr. Giovanni Barbarossa
1:00 p.m. - 1:55 p.m.

Panel: Realistic Check of AI Interconnect Scaling Solutions for the Post-1.6T Era
Panelist: Dr. Sanjai Parthasarathi
4:00 p.m. - 5:00 p.m.

Wednesday, September 23, 2026

Scaling Ground Station Connectivity for Satellite Constellations
Speaker: Jessica Wang
10:20 a.m. - 10:35 a.m.

ECOC CONFERENCE

Sunday, September 20, 2026

Workshop: “Light Sources for Next-Generation Optical Communication Systems for AI Datacenters”
Organizer: Dr. Wilfried Maineult
9:00 a.m. - 12:30 p.m.

Workshop: “Hybrid Solutions for Very High Speed PON – the best (or worst) of coherent and IMDD worlds”
Speaker: Dr. Noriaki Kaneda
2:45 p.m. - 3:00 p.m.

Workshop: “Can Fast Narrow Channels Keep Rising Without Limit or Will Slow and Wide Become the Winner?”
Speaker: Dr. Chris Kocot
4:30 p.m. - 4:42 p.m.

Wednesday, September 23, 2026

Poster Presentation: “PAM4 448 Gb/s per Lane InP MZM-SOA Array PIC for Next-Generation CPO”
Speaker: Dr. Anna Tatarczak
3:30 p.m. - 5:00 p.m.

Public Presentation: “2.3 Tbit/s Backside-Emitting 1060 nm VCSEL Array on Silicon Interposer for CPO Applications”
Speaker: Dr. Marc Ganzhorn
5:00 p.m. - 5:15 p.m.

Thursday, September 24, 2026

Technical Session: “Novel Modulators: Discrete Photonic Devices and Technologies”
Chair: Dr. Wilfried Maineult
9:00 a.m. - 10:30 a.m.

Visitors to ECOC 2026 can experience Coherent's latest optical networking technologies and meet with company experts at Stand 2100, Hall 2, at FYCMA - Trade Fair & Congress Center in Málaga, September 21-23, to explore the demonstrations and discuss optical connectivity and break-through technologies.

For more information, visit www.coherent.com.

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.

Media Contact:
[email protected] 

Key Takeaways Coherent's fiscal Q4 revenues rose to $2.05 billion, led by $1.62 billion from datacenter and communications.Datacenter and communications generated nearly 79% of Coherent's Q4 revenue, up from about 67% a year ago.COHR gained 171% over the past year, while its fiscal 2027 earnings estimate increased over 60 days. Coherent’s (COHR - Free Report) fiscal fourth-quarter performance clearly points to one growth driver: datacenter and communications demand. Revenues reached $1.62 billion in the fourth quarter of fiscal 2026, rising from $1.36 billion in the preceding quarter and $1.02 billion in the year-ago period. The sequential increase was about $253 million, while the year-over-year gain approached $600 million.

That expansion lifted Coherent’s total revenues to $2.05 billion, up from $1.81 billion in the third quarter and $1.53 billion a year earlier. Datacenter and communications therefore accounted for nearly 79% of fourth-quarter revenue, compared with roughly 67% in the prior-year quarter. Its growing contribution shows that the revenue mix became more concentrated in this market.

The five-quarter progression reinforces the trend. Datacenter and communications revenues advanced every quarter, climbing from $1.02 billion in the fourth quarter of fiscal 2025 to $1.09 billion, $1.21 billion, $1.36 billion and finally $1.62 billion. Total revenues followed the same upward direction, moving from $1.53 billion to $1.59 billion, $1.69 billion, $1.81 billion and $2.05 billion.

Industrial revenues moved differently. It declined in each quarter, falling from $511 million to $431 million across the displayed period. Consequently, the $517 million increase in total revenues between the two fourth quarters came entirely from datacenter and communications, which more than offset an $80 million industrial decline. The chart thus presents Coherent’s recent growth as a datacenter-led story, with that segment carrying the company’s overall quarterly revenue momentum.

How Are Peers Positioned?Lumentum Holdings (LITE - Free Report) is benefiting from the same optical transition, with fiscal fourth-quarter revenues soaring 109% to $1.01 billion. Lumentum forecasts $1.225-$1.275 billion next quarter as AI demand accelerates, though Lumentum must scale supply smoothly.

Fabrinet (FN - Free Report) , a manufacturer of complex optical products, delivered 45% quarterly revenue growth to a record $1.32 billion. Fabrinet anticipates another sequential increase, but customer concentration and elevated inventories deserve attention. Even so, Fabrinet remains well placed to benefit from expanding optical deployments.

COHR’s Price Performance & EstimatesCOHR stock has gained 171% over the past year against the industry’s 22.5% decline.

                                                                Image Source: Zacks Investment Research

From a valuation standpoint, COHR trades at a forward price-to-earnings ratio of 28.65X, above the industry’s 20.5X. It carries a Value Score of D.

                                                                   Image Source: Zacks Investment Research

The Zacks Consensus Estimate for COHR’s fiscal 2027 earnings increased 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.

SAXONBURG, Pa., Sept. 17, 2026 (GLOBE NEWSWIRE) -- Coherent Corp. (NYSE: OHR), the global leader in photonics, today announced the expansion of its Pluggable Optical Line System (POLS) portfolio, with the full C-band, high-power variable-gain amplifier optical line system in a compact QSFP form factor. Designed for the latest generation of 800G ZR/ZR+ digital coherent optics, the enhanced POLS supports up to 32 DWDM wavelengths over a single fiber pair, enabling as much as 25.6Tbps of AI datacenter traffic across links from 2km to 200km.

Targeting the high-capacity interconnect requirements of Internet Service and Cloud Hosting Providers, and AI infrastructure operators, the enhanced POLS integrates key optical transport functions into QSFP modules that plug directly into standard transceiver slots. Thanks to Coherent’s high-performance miniature optical components, including dual-chip micropump lasers, POLS provides 21dBm output power, variable gain, low power consumption, and autonomous plug-and-play operation. Auto-provisioning manages link configuration and laser safety, while fixed wavelength and colorless MUX/DMUX options and asymmetric optical connectors simplify deployment and help prevent fiber-connection errors.

"As AI infrastructure scales, customers require optical connectivity that combines greater capacity, operational simplicity, and deployment flexibility," said Madhu Krishnaswamy, Senior Vice President, Telecom Transport Business Unit at Coherent. “Since we first introduced POLS, Coherent has continued to advance the ultra-compact optical components that enable this platform, including our dual-chip 700mW uncooled 3-pin 980nm pump laser and isolator-tap photodiode technology. By extending plug-and-play operation across the full C-band, we are helping customers reduce the traditional tradeoffs between performance and operational simplicity. This advancement represents another important step toward more automated, open, and high-capacity optical networks for the AI era.”

The enhanced POLS is generally available and shipped in high volume. Coherent offers versions supporting 400G and 800G ZR and ZR+ applications with either SFF-8636 or CMIS 4.0 memory maps, enabling straightforward deployment in existing network environments.

Visitors to ECOC 2026 are invited to experience the latest POLS technology at the Coherent Booth #2100. Additional product information is available at www.coherent.com.

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, visit us at coherent.com.

Media Contact:
[email protected] 

Coherent Corp. is positioned as a foundational AI infrastructure leader, now trading at a compressed 28.8x forward P/E and PEG of 0.55. Three converging catalysts—Thermadite/SiC cooling, PhotonLink platform launch, and executive compensation targets—could drive a significant re-rating toward $454.43. COHR's 6-inch InP wafer transition and U.S./Europe production expansion underpin margin expansion, targeting 45%+ gross margins by mid-2027.

Key Takeaways Coherent's 24% monthly drop offers an entry point despite premium valuation and execution risks.COHR's datacenter revenues surged 58.6% as AI infrastructure and optical connectivity demand strengthened.Coherent's rising margins, capacity expansion and long-term customer commitments support earnings growth. Coherent Corp. (COHR - Free Report) has been one of the standout performers in the technology hardware space over the past year. Its shares have soared 155%, sharply outperforming the industry’s 18% decline and the Zacks S&P 500 Composite’s 17% gain. More recently, however, the stock has fallen 24% over the past month, entering correction territory after its remarkable run.

                                                             Image Source: Zacks Investment Research

This pullback raises a crucial question: Does it represent an attractive buying opportunity, a reason to hold existing positions, or a signal to remain on the sidelines? Although Coherent’s valuation remains elevated, its improving fundamentals suggest that the company’s long-term growth story remains firmly intact.

Let’s delve deeper.

COHR’s AI-Centric Portfolio Creates Strong GrowthCOHR’s business mix has shifted decisively toward artificial intelligence infrastructure and optical connectivity. Datacenter & Communications generated nearly 79% of fourth-quarter fiscal 2026 revenues compared with roughly 67% a year earlier, as segment sales surged 58.6% year over year to $1.6 billion. Demand for high-speed transceivers, optical circuit switching, co-packaged optics, multi-rail systems and PhotonLink solutions should support further expansion as datacenter operators upgrade network capacity. Demand visibility extending into calendar 2028 and long-term agreements running through the decade provide additional confidence.

However, this rapid transformation has increased COHR’s dependence on hyperscaler capital spending and timely customer deployments. Industrial revenues declined 15.8% year over year to $430.5 million, offering limited diversification against a datacenter slowdown. Therefore, while AI infrastructure represents a compelling multiyear opportunity, COHR’s performance is becoming increasingly sensitive to datacenter investment cycles, customer concentration and execution within its optical-connectivity operations.

COHR’s Capacity Expansion Can Unlock DemandCOHR’s growth potential depends heavily on removing indium phosphide production constraints. The company expects output to double year over year during the current quarter, followed by another increase exceeding 100% in calendar 2027. This expansion should help COHR address strong demand for 800-gigabit and 1.6-terabit transceivers and support emerging applications such as co-packaged optics and optical circuit switches. The transition to six-inch indium phosphide manufacturing is particularly important because the platform can reportedly generate roughly four times the output at about half the cost of the older three-inch process. Higher production yields, improved scale and lower unit costs could therefore support both revenue growth and margin expansion.

However, the ramp carries meaningful execution risk. Delays in equipment qualification, manufacturing yield improvement or customer certification could restrict shipments despite healthy demand. COHR must consequently convert its ambitious capacity investments into reliable production without compromising quality or creating excess supply if customer deployment schedules change.

COHR’s Revenue Growth Is Becoming More ProfitableCOHR’s profitability trends indicate that its strong revenue growth is translating into better operating leverage. Fiscal fourth-quarter GAAP gross margin increased 277 basis points year over year to 38.5%, while adjusted gross margin expanded 215 basis points to 40.2%. Adjusted operating margin advanced 381 basis points to 21.8%, supported by higher manufacturing yields, lower input costs, pricing actions and a more favorable product mix. Adjusted operating income grew 62.1%, significantly faster than the 33.8% increase in revenues, demonstrating improved cost absorption and operating efficiency. The midpoint of first-quarter fiscal 2027 adjusted gross-margin guidance stands at 40.5%, suggesting that profitability can remain resilient as production scales.

Nevertheless, maintaining these gains will require continued yield improvements and disciplined capacity execution. A larger contribution from advanced optical products should strengthen margins, but manufacturing inefficiencies or unfavorable pricing could offset the benefits. Sustained margin expansion would confirm that COHR’s AI-led growth is creating durable economic value rather than merely increasing business volume.

Premium Valuation Appears Supported by Improving FundamentalsCoherent currently trades at approximately 25.89 times forward earnings, significantly higher than the industry's 21.02 times forward earnings multiple.

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 2027 revenues of $10.68 billion, indicating 50% year-over-year growth. Momentum is expected in fiscal 2028, with revenues forecasted to increase 35% from the prior year.

The earnings outlook is equally impressive. The consensus estimate indicates fiscal 2027 EPS of $9.38, suggesting 67.2% year-over-year growth. Looking ahead, analysts expect EPS to climb another 46% in fiscal 2028, 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.

                                                                      Image Source: Zacks Investment Research

Two Optical Peers to WatchAmong optical peers, Lumentum Holdings (LITE - Free Report) and Applied Optoelectronics (AAOI - Free Report) provide useful benchmarks. Lumentum Holdings generated fiscal fourth-quarter revenues of $1.01 billion, more than doubling year over year, and guided to further sequential growth. Applied Optoelectronics posted second-quarter revenues of $191.9 million, up 86%, as its 800G ramp strengthened.

Lumentum Holdings offers broader scale and stronger margins, whereas Applied Optoelectronics brings faster expansion from a smaller base. Coherent’s greater revenue scale is an advantage, but the progress of both rivals shows that competition for AI-optics demand remains intense. Sustaining leadership will require converting demand into consistent margins and cash.

COHR is a Buy After the PullbackCoherent’s recent pullback offers an attractive entry point for investors willing to tolerate near-term volatility. The company’s increasingly AI-focused portfolio, demand visibility and expanding optical capacity position it to benefit from sustained datacenter investment. At the same time, stronger manufacturing yields, a richer product mix and improving operating leverage are turning rapid revenue growth into faster earnings expansion. Risks surrounding hyperscaler spending, customer concentration and execution remain, while the stock’s premium valuation leaves little room for disappointment. Even so, the improving financial profile and compelling multiyear growth runway outweigh those concerns. COHR therefore looks like a buy for growth-oriented investors.

COHR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

14.9.2026 22:06

Americké akciové indexy se v závěru pondělní seance ponořily hlouběji do červených čísel. Nejhorší bilanci vykázal technologický Nasdaq, který oslabil o 0,56 %. Širší index S&P500 uzavřel se ztrátou -0,48 % a tradiční index Dow Jones -0,29 %.

Pod tlakem se ocitl především polovodičový sektor. Referenční Philadelphia SE Semiconductor Index propadl o 5,9 % poté, co představitelé předních světových AI společností vyzvali ke zpomalení vývoje pokročilých modelů s odkazem na rostoucí rizika spojená s touto technologií.

V závěru dne se směrem vzhůru opětovně vydaly tržní výnosy. 10letý vládní bond uzavřel těsně pod hladinou 4,99 %. Nedařilo se ani drahým kovům. Zlato odepsalo 1,5 % se závěrem na 4282,8 USD/oz, stříbro oslabilo o 2,3 % na 62,97 USD/oz. Růst byl naopak k vidění v energetickém sektoru. Ropa zpevnila o 1,7 % na 101,72 USD/barel, zemní plyn končil silnější o 1,3 % na 2,87 USD/mmbtu.

Závěrečné hodnoty:

Dow Jones -0,29 % na 52421,2 b.
S&P 500 -0,48 % na 7619,98 b.
Nasdaq Composite -0,56 % na 26186,41 b.

Index S&P 500 -0,48 % na 7619,98 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Komunikační služby +2,8 % Informační technologie -1,7 % Zdravotní péče +1,4 % Průmysl -1,4 % Nezbytná spotřeba +1,3 % Utility -1,3 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Crowdstrike Holdings (CRWD) +14 % Corning (GLW) -14 % Palo Alto Networks (PANW) +13 % Teradyne (TER) -13 % Gartner (IT) +9,7 % Coherent Corp (COHR) -13 % Coinbase Global (COIN) +9,2 % Hewlett Packard Enterprise (HPE) -11 % Fortinet (FTNT) +9,0 % Skyworks Solutions (SWKS) -10 %
David Lamač
Fio banka, a.s.
Prohlášení

A month has gone by since the last earnings report for Coherent (COHR - Free Report) . Shares have lost about 10.4% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Coherent due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Coherent Corp. before we dive into how investors and analysts have reacted as of late.

COHR Q4 Earnings Beat EstimateCoherent reported fiscal fourth-quarter adjusted EPS of $1.74, which increased 74% year over year and 23.4% quarter over quarter, beating the Zacks Consensus Estimate by 7.4%. Revenues crossed $2 billion, beating the Consensus Estimate by 2.7% and increasing 33.8% year over year and 13.3% sequentially.

COHR’s Revenue Growth Accelerates Into the Year-EndFull-year revenues rose 22.5% year over year to a record $7.1 billion from $5.8 billion. Pro forma growth was stronger at approximately 28%, reinforcing that the underlying portfolio expanded faster than the reported total after accounting for business sales.

The Datacenter & Communications segment provided nearly all the momentum. Quarterly segment revenues climbed to $1.6 billion, up 58.6% year over year and 18.6% quarter over quarter. It represented roughly 79% of consolidated revenues, compared with about 67% a year earlier.

Industrial revenues moved in the opposite direction, falling 15.8% year over year and 3% sequentially to $430.5 million. For the full year, Datacenter & Communications advanced 40.5% to $5.275 billion, while Industrial declined 10.3% to $1.8 billion. Coherent’s growth profile is therefore becoming more concentrated around AI networking and optical connectivity.

Margin Expansion Made the Growth More ValuableThe earnings quality improved alongside revenues. GAAP gross margin expanded to 38.5%, up 277 basis points year over year and 82 basis points sequentially. Adjusted gross margin reached 40.2%, improving 215 basis points annually and 66 basis points from the fiscal third quarter.

Manufacturing yields, lower input costs, pricing actions and progress on six-inch indium phosphide production contributed to the expansion. The six-inch platform is especially important because it can produce roughly four times the output at about half the cost of the older three-inch process.

Adjusted operating income increased 62.1% year over year and 21.8% sequentially to $446 million. The corresponding operating margin reached 21.8%, expanding 381 basis points year over year and 152 basis points quarter over quarter.

Adjusted net income rose 82.7% annually and 27.2% sequentially to $351 million. GAAP EPS improved to $1.19 from a loss of $0.83 one year earlier and $0.97 in the preceding quarter.

Capacity Spending Raises Both Potential and RiskIndium phosphide production remains the principal constraint, although output is scheduled to double year over year during the current quarter. Demand visibility extends into calendar 2028, supported by long-term agreements running through the decade. Additional growth should come from 800-gigabit and 1.6-terabit transceivers, optical circuit switching, co-packaged optics, multi-rail systems and the PhotonLink platform.

Supporting those opportunities requires substantial spending. Fourth-quarter capital expenditures reached $556 million, while full-year additions to property, plant and equipment surged 150.2% to $1.103 billion. Annual operating cash flow nevertheless fell 87.5% to $79.5 million.

Inventory increased 79.5% year over year to $2.581 billion, considerably faster than revenues. Although expanding inventory can support a rapid production ramp, it also raises working-capital and demand-forecasting risk. Positively, total debt declined approximately 12.6% to $3.222 billion and cash increased 27.8% to $1.162 billion.

COHR’s Guidance Points to Another Step-UpFor the first quarter of fiscal 2027, Coherent expects revenues of $2.2 billion to $2.4 billion. The $2.3 billion midpoint implies approximately 12.4% sequential growth and about 45.6% growth from first-quarter fiscal 2026 revenues of $1.58 billion. The comparison is not perfectly like-for-like because of portfolio changes, but the acceleration remains substantial.

The company expects an adjusted gross margin of 39.5%-41.5%. Its 40.5% midpoint would represent a modest 30-basis-point sequential improvement. Projected adjusted EPS of $1.85-$2.05 implies midpoint growth of 12.1% from the fiscal fourth quarter and approximately 68% year over year.

Guidance exceeded the prior quarter’s scale and established a credible path toward a quarterly revenue run rate above $3 billion by fiscal 2027’s end.

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 10.08% due to these changes.

VGM ScoresAt this time, Coherent has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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. It comes with little surprise Coherent has a Zacks Rank #2 (Buy). We expect an above average 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, Dave Inc. (DAVE - Free Report) , has gained 7.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

DAVE INC reported revenues of $170.8 million in the last reported quarter, representing a year-over-year change of +29.7%. EPS of $4.12 for the same period compares with $3.14 a year ago.

For the current quarter, DAVE INC is expected to post earnings of $4.35 per share, indicating a change of +2.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +2% over the last 30 days.

DAVE INC has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

8.9.2026 22:09

Zámořské akciové trhy zakončily dnešní obchodování v záporném teritoriu. Index Dow Jones klesl o 1,18 % na 52 786,28 bodu, S&P 500 si odepsal 0,58 % a technologický Nasdaq Composite ztratil 0,32 %. Hlavním důvodem poklesu byl růst cen ropy způsobený geopolitickým napětím na Blízkém východě, který opět rozproudil obavy z vyšší inflace a možného zvýšení úrokových sazeb ze strany centrální banky.

V rámci indexu S&P 500 se nejvíce dařilo energetickému sektoru s růstem o 1 %, utilitám se ziskem 0,9 % a realitám, které přidaly 0 %. Naopak nejvýraznější propad zaznamenala zdravotní péče se ztrátou 2,6 %, finanční sektor klesající o 1,4 % a základní materiály nižší o 0,9 %. Z jednotlivých akcií výrazně posílily společnosti Lumentum Holdings (LITE) o 11 %, Intel Corp (INTC) o 9,1 %, Corning (GLW) o 7,6 %, Coherent Corp (COHR) o 7,1 % a Hewlett Packard Enterprise (HPE) o 7,8 %. Naopak nejvýrazněji propadly akcie společností Amgen (AMGN) o 10 %, Howmet Aerospace (HWM) o 11 %, Stryker Corp (SYK) o 8,8 %, Expedia Group (EXPE) o 7,9 % a GoDaddy (GDDY) o 8,3 %.

Na dluhopisovém trhu rostly výnosy krátkodobých cenných papírů a výnos desetiletého amerického vládního dluhopisu mírně stoupl na 4,79 %. Měnový trh zůstal bez výraznějších změn, euro stagnovalo na úrovni 1,1623 USD a kurz japonského jenu se pohyboval kolem 154,30 JPY za dolar. Komodity zaznamenaly smíšený vývoj, když lehká ropa WTI posílila o 1 % na 92,43 USD za barel, zatímco spotové zlato mírně odepsalo 0,3 % na 4 392,74 USD za trojskou unci.

Index Dow Jones -1,18 % na 52786,28 b.
S&P 500 -0,58 % na 7673,51 b.
Nasdaq Composite -0,32 % na 26421,41 b.

Index S&P 500 -0,58 % na 7673,51 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Energie +1 % Zdravotní péče -2,6 % Utility +0,9 % Finanční sektor -1,4 % Reality +0 % Základní materiály -0,9 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Lumentum Holdings (LITE) +11 % Howmet Aerospace (HWM) -11 % Intel Corp (INTC) +9,1 % Amgen (AMGN) -10 % Hewlett Packard Enterprise (HPE) +7,8 % Stryker Corp (SYK) -8,8 % Corning (GLW) +7,6 % GoDaddy (GDDY) -8,3 % Coherent Corp (COHR) +7,1 % Expedia Group (EXPE) -7,9 %
Daniel Marván, Fio banka, a.s.

Sherri R. Luther, Chief Financial Officer of Coherent (COHR +5.53%), sold 3,000 shares of common stock on Aug. 18, 2026, as disclosed in a recent SEC Form 4 filing.

Transaction summaryMetricValueTransaction value$972,000Shares sold3,000Post-transaction shares (directly held)64,475Post-transaction value$19.7 millionTransaction value based on SEC Form 4 weighted average sale price ($324); post-transaction value based on Aug. 18, 2026, market close ($306.43).

Key questionsWhat was the regulatory basis for this transaction?
The sale was conducted under a Rule 10b5-1 trading plan adopted by Luther on Nov. 13, 2025, which allows corporate insiders to schedule equity transactions in advance to mitigate concerns regarding non-public information.How does the stock's recent performance compare to the transaction price?
The 3,000 shares were sold at $324 per share, with Coherent shares having delivered a 239% total return over the 12 months ending on the transaction date of Aug. 18, 2026.What is the scale of the insider's remaining equity position?
Following the sale, the CFO retains direct ownership of 64,475 shares, which carried a market value of $19.7 million.Are there other forms of beneficial ownership beyond common stock?
The filing indicates that the reporting person's equity exposure is primarily composed of direct holdings, with no reported indirect interests in family trusts or other investment vehicles at the time of this transaction.Company OverviewMetricValueShare Price (as of market close 2026-08-19)$287.47Market Capitalization$51.7 billionRevenue (TTM)$7.1 billionNet Income (TTM)$769.9 millionCompany SnapshotCoherent specializes in advanced laser technologies, offering a comprehensive portfolio of lasers, laser-based solutions, and integrated systems deployed across commercial, industrial, and scientific research applications.The company operates through two primary business segments: laser sources for Original Equipment Manufacturers (OEMs) and industrial lasers with integrated systems, generating revenue through both direct sales and OEM partnerships.Coherent serves a diverse customer base, including industrial manufacturers, semiconductor equipment producers, scientific research institutions, and commercial enterprises requiring precision laser solutions.Coherent is a leading provider of advanced laser technologies, with a market capitalization of $51.7 billion and TTM revenue of $7.1 billion, reflecting substantial scale in the hardware and equipment sector. The company's dual-segment business model provides diversified revenue streams and positions Coherent at the intersection of critical technology trends in manufacturing, semiconductors, and scientific innovation. With a workforce of 51,478 employees and demonstrated operational profitability (TTM net income of $769.9 million), Coherent maintains a competitive advantage through its vertically integrated approach to laser technology development and its established relationships across key industrial verticals.

Premium Feature

Moneyball Superscore

72/100

Today's Change

(

5.53

%) $

14.61

Current Price

$

279.02

What this transaction means for investorsWhen a shareholder hears that an executive sells 3,000 shares for nearly $1 million, it can sound alarming. But digging into this transaction a bit, there doesn't seem to be anything indicating this sale represents something that may be amiss with Coherent. That's because this falls under a trading plan established in November 2025, so it wasn't a spur-of-the-moment decision. In addition, while Luther sold 3,000 shares, she still holds a significant stake with 64,475 shares. In addition, even if this sale hadn't occurred under an established trading plan, it would have still made sense for the insider to sell and take some profits off the table. Over the last 12 months, the Coherent stock price has climbed 176.5% as of this writing. In comparison, the S&P 500 is up 19.1% over the same period.

Despite the massive run-up in the stock price, analysts remain generally bullish on the company's outlook over the next year. According to CNN, of the 28 analysts cover Coherent, 79% rate it a buy, 18% a hold, and 4% a sell. From that group of 28 analysts, the median one-year price target is $420, representing a 58.8% gain from today's price. The most bullish price target from the group is $500, representing a potential gain of 89.1%. And even the group's lowest price target, $280, still represents a potential gain of 5.9%.

Key Takeaways Coherent shares fell 17% in a month despite fiscal 2026 revenues rising 22.5% to $7.12 billion.Coherent's fiscal 2027 is essentially booked through calendar 2027, with customer orders extending into 2028.Coherent's Q4 capex jumped to $556 million as operating cash flow fell to $79.5 million. Coherent Corp. (COHR - Free Report) shares have fallen 17% in the past month despite rapidly improving operating results. Fiscal 2026 revenues climbed 22.5% to $7.12 billion as AI-driven Datacenter and Communications demand accelerated.

                                                                    Image Source: Zacks Investment Research

The investment debate now centers on whether Coherent can convert its record demand visibility into profitable cash flow. Rising capacity spending, working-capital needs and several overlapping product ramps keep execution risk elevated even as the growth runway lengthens.

COHR's AI Demand Backdrop Remains StrongDatacenter and Communications generated $5.27 billion in fiscal 2026 revenues, up 40.5% year over year, and represented 79% of fourth-quarter revenues. Fiscal 2027 is essentially booked through the end of calendar 2027.

Customer orders now extend into calendar 2028, while long-term agreements reach through the end of the decade. Coherent also expects quarterly revenues to exceed $3 billion by the end of fiscal 2027, supported by capacity growth and new optical platforms.

Coherent's Margin Expansion Supports the Bull CaseAdjusted gross margin reached 40.2% in the fiscal fourth quarter, up 215 basis points year over year. Full-year adjusted gross margin improved 152 basis points to 39.4%, helped by lower input costs, better manufacturing yields and pricing optimization.

Six-inch indium phosphide wafers offer roughly four times the output at about half the cost of three-inch wafers, while yields are also higher. As that platform scales, management expects further margin improvement from its lower cost structure.

COHR's Cash Flow and Capex Raise Near-Term RiskFourth-quarter capital expenditures jumped to $556 million from $131 million a year earlier. Fiscal 2026 additions to property, plant and equipment reached $1.10 billion versus $440.8 million in fiscal 2025, and management expects another sequential capital-spending increase in the current quarter.

Operating cash flow fell to $79.5 million from $633.6 million, while inventory climbed 79.5% to $2.581 billion. The buildup supports expansion, but it also raises working-capital and demand-forecasting risk until production and cash generation catch up.

Coherent Faces a Crowded Execution CalendarIndium phosphide remains the primary transceiver bottleneck, and nearly every Datacenter and Communications product line is supply constrained. Coherent must simultaneously scale 1.6-terabit transceivers, optical circuit switching, co-packaged optics, multi-rail products and six-inch wafer production while Industrial demand remains weak.

Lumentum Holdings Inc. (LITE - Free Report) is also expanding U.S. manufacturing for advanced lasers serving AI data centers. Applied Optoelectronics, Inc. (AAOI - Free Report) is ramping 800-gigabit and 1.6-terabit transceiver capacity and expects demand to outpace production through mid-2027, underscoring the manufacturing race across AI optics.

COHR's Momentum Signal Is Strong but Mixed ElsewhereThe decline has lowered the entry price, but valuation is not clearly cheap. COHR trades at 26.5X forward 12-month earnings, above the Zacks sub-industry's 20.2X and equal to its five-year median multiple. Durable AI demand and expanding margins support upside, while weak cash conversion and overlapping ramps argue for selectivity.

COHR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Coherent has a Momentum Score of A. The Zacks Consensus Estimate for fiscal 2027 earnings has risen 13.0% over the past four weeks, supporting the favorable near-term signal. Still, a Value Score of D, Growth Score of F and VGM Score of F temper the broader Style Score picture and keep execution and valuation risks in focus.

Coherent's stock just absorbed a brutal pullback while its forward earnings estimates climbed higher, a rare split that forces a direct question about whether the optical AI infrastructure trade still has legs at this price.

Coherent (NYSE:COHR | COHR Price Prediction) looks compelling at $268.64, with the stock having pulled back 8.74% in the past week even as forward earnings estimates keep marching higher. That combination of cooling price and heating fundamentals is exactly the moment worth having a view on.

Coherent is a photonics manufacturer whose lasers, transceivers, and optical components sit at the physical layer of the AI datacenter. Its Datacenter and Communications segment now accounts for 79% of total sales and grew 59% year over year in the June quarter. A run from roughly $87.80 a year ago to the high $330s in August, followed by a fade back to the current level, has left the stock in a genuine debate zone.

Why the AI Bandwidth Trade Still Has Room The bull case rests on a supply-constrained business selling into a demand curve that keeps steepening. Q4 revenue hit $2.05 billion, non-GAAP EPS came in at $1.74, and non-GAAP operating margin expanded to 21.8% from 18.0% a year earlier. Management guided Q1 FY27 revenue to between $2.2 billion and $2.4 billion and is targeting a quarterly revenue run rate above $3 billion by the end of fiscal 2027.

Bookings hit a record, customer orders now extend into calendar 2028, and CEO Jim Anderson said “AI datacenter architectures increasingly transition from copper to optical connectivity.” That copper-to-optical shift is the same tailwind lifting the non-chip AI suppliers we profiled in a free report on seven picks-and-shovels names powering the buildout. New platforms in 1.6T transceivers, optical circuit switches, CPO, and thermal solutions all ramp into fiscal 2027, and analysts have raised the FY27 EPS estimate from $8.0885 ninety days ago to $9.4061.

Where the Valuation Gets Uncomfortable The bear case starts with the multiple. A trailing P/E of 65 leaves little margin for error, and FY26 operating cash flow fell 87.45% to $79.5 million as capital expenditures jumped 150.18% to $1.1 billion. Long-term debt sits at $3.2 billion.

Concentration compounds the risk. Nearly four fifths of revenue depends on hyperscaler AI capex, industrial revenue was roughly flat pro forma for the year, and Q3 industrial fell 16.1%. Any push out of CPO, indium phosphide yield stumbles, or slowdown in 800G and 1.6T adoption hits a stock that already tripled off its September 2025 base.

Argument for Patience The hold view says the setup is real but the entry is awkward. Shares are down 6.77% over the past month, and the next print will test whether guidance ranges tighten. Coherent Photon Link launches at an industry event on September 21, CPO revenue begins in fiscal Q2 2027, and Thermodyte cooling ramps in the second half of calendar 2027. Waiting one quarter costs optionality but buys visibility on capex payback and margin trajectory toward the 42% gross margin target.

What the Numbers Say About the Setup Coherent currently trades at $268.64 against an average analyst price target of $397.63 across 21 analysts, implying roughly 48% upside, with a consensus Buy rating. Targets are one data point among many.

Performance context matters. COHR is up 45.55% year to date and 205.97% over one year, versus roughly 11.99% YTD and 18.13% over one year for the S&P 500. FY26 revenue reached $7.12 billion, up 22.51%, with net income of $805 million.

Why the Setup Still Looks Favorable Here At $268.64, the setup warrants a closer look. Here is why.

The path to appreciation is mechanical. Internal indium phosphide capacity doubles by the end of the current quarter, one quarter ahead of plan, and doubles again by the end of calendar 2027. That directly translates into transceiver volume for 800G and 1.6T, the two products in tightest demand. Layer in CPO revenue starting fiscal Q2 2027 with NVIDIA-linked ultra-high-power lasers, plus optical circuit switching addressing a $4 billion opportunity, and the FY28 consensus of $13.9489 in EPS looks bracketed by real orders.

The risk/reward at this entry is favorable because the stock has already absorbed a roughly 20% drawdown from the August print while forward estimates rose. What would invalidate the call: a CPO push out, a 1.6T adoption stall, or a hyperscaler capex reset. Investors should watch quarterly indium phosphide output, 1.6T mix, and CPO revenue recognition in the December quarter.

Coherent is compounding earnings faster than its price is rising, and that is the crux of the bull case.

Contact [email protected] for any questions or corrections.

Deutsche Bank Unveils Its Top AI Hardware Stocks as Demand Keeps Growing Summary

Deutsche Bank sees opportunities across optical components, networking and computing hardware as AI infrastructure spending expands

Deutsche Bank has started covering a group of hardware stocks tied to the expansion of AI infrastructure, with Lumentum Holdings LITE and Coherent COHR emerging as its top picks.

Analyst Gianmarco Conti said AI adoption is increasing demand for computing capacity as consumers and businesses use more data and digital services. That trend could broaden the investment opportunity beyond GPUs toward CPUs, optical components and other infrastructure.

Lumentum and Coherent received Buy ratings. Deutsche Bank pointed to their laser technologies, which are used in optical connections for AI systems. Conti also noted that both companies face supply constraints and are raising prices, while Nvidia has invested $2 billion in each company.

Arista Networks ANET and Cisco Systems CSCO also received Buy ratings. Deutsche Bank cited Arista's exposure to enterprise and sovereign AI deployments and Cisco's combination of silicon, optics and networking systems, alongside $9.3 billion in hyperscaler AI orders.

Hewlett Packard Enterprise (HPE) also earned a Buy rating. A10 Networks (ATEN), Dell Technologies (DELL) and Ingram Micro (INGM) received Hold ratings.

What it means for stocks: Deutsche Bank's coverage highlights optical and networking suppliers as potential beneficiaries of continued AI infrastructure spending.

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

Click for the complete disclosure

Shares of Coherent (COHR - Free Report) have gained 1.5% over the past four weeks to close the last trading session at $275.49, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $408.7 indicates a potential upside of 48.4%.

The mean estimate comprises 20 short-term price targets with a standard deviation of $58.69. While the lowest estimate of $279.00 indicates a 1.3% increase from the current price level, the most optimistic analyst expects the stock to surge 81.5% to reach $500.00. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.

While the consensus price target is highly sought after by investors, the ability and unbiasedness of analysts in setting price targets have long been questionable. And investors making investment decisions solely based on this tool would arguably do themselves a disservice.

But, for COHR, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.

Price, Consensus and EPS Surprise

Here's What You Should Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.

While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?

They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.

However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.

That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.

Here's Why There Could be Plenty of Upside Left in COHRThere has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For the current year, 10 estimates have moved higher over the last 30 days compared to no negative revision. As a result, the Zacks Consensus Estimate has increased 13.1%.

Moreover, COHR currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .

Therefore, while the consensus price target may not be a reliable indicator of how much COHR could gain, the direction of price movement it implies does appear to be a good guide.

SK Hynix just published a technology roadmap that redraws where optics belong inside an AI system, and one company supplies nearly every component required to build it.

The investment case for Coherent Corp. (NYSE: COHR) | COHR Price Prediction has largely centered on one increasingly important problem: artificial intelligence processors are producing data faster than conventional electrical connections can move it. That imbalance has driven rapid demand for Coherent’s 800-gigabit and 1.6-terabit optical transceivers, indium phosphide lasers, optical circuit switches, and silicon-photonics components.

A new technology roadmap from SK hynix Inc. (NASDAQ: SKHY) suggests that Coherent’s opportunity could become substantially broader.

On August 20, SK hynix announced that it had collaborated with researchers from several leading universities on a co-packaged-optics roadmap published in Nature Electronics. The paper describes an AI architecture in which optical links move beyond communications between conventional network switches and directly connect separate pools of processors and memory.

That distinction is the investment hook. Coherent is already benefiting as data centers replace copper connections with optical transceivers. Nvidia has also moved CPO into production for networking switches. SK hynix is now describing an additional stage in which photonics becomes part of the architecture connecting processors with memory resources.

If the industry follows this direction, optics will not remain confined to the edges of AI servers and switches. It will move progressively closer to the most valuable components in the system: accelerators and high-bandwidth memory.

Coherent is positioned across nearly every critical portion of that transition. The company supplies high-power indium phosphide lasers, external laser-source modules, silicon-photonics components, microlens arrays, fiber-attach units, polarization-maintaining fiber, optical circuit switches, and complete optical transceivers. It has demonstrated a 6.4-terabit silicon-photonics CPO system and has secured very-high-volume, multiyear orders from a leading AI data center customer.

The market has already recognized Coherent as an AI optical-transceiver company. SK hynix’s roadmap creates a more expansive possibility: Coherent could become an enabling supplier for the optical fabric connecting processors, switches, and memory throughout the AI system.

SK Hynix Is Looking Beyond HBM SK hynix became one of the largest financial beneficiaries of the AI boom by solving the first major memory bottleneck. Its high-bandwidth memory places vertically stacked DRAM close to the processor and connects it through an extremely wide interface, allowing substantially more data to reach the accelerator than conventional server memory can provide.

That position has generated extraordinary cash flow. On August 19, SK hynix announced a KRW40 trillion, or approximately $28.7 billion, share-repurchase program. The company will buy and cancel 24.07 million common shares, representing approximately 3.3% of its issued shares.

The cancellation is important because those shares will be permanently removed rather than held in treasury for possible reissuance. SK hynix also committed to returning more than 50% of cumulative free cash flow generated during its 2025–2027 shareholder-return period through repurchases, cancellations, and dividends.

One day after announcing the buyback, however, SK hynix focused attention on what comes after HBM.

The company’s CPO technology roadmap argues that the AI industry is moving from chip-level competition toward system-level competition. HBM increased bandwidth between memory and an accelerator, but increasingly large AI systems must also move data between thousands of accelerators, multiple memory resources, storage systems, and network switches.

Electrical signals encounter greater power consumption, heat generation, and signal-integrity problems as speeds and distances increase. The industry can continue improving copper connections, but the physical limitations become progressively more difficult and expensive to overcome.

Optical connections carry more data over longer distances while consuming less energy per bit. CPO moves the optical conversion closer to the processor or switching silicon, minimizing the distance traveled electrically.

SK hynix’s proposed architecture goes further than the CPO switches attracting most current investment attention. It describes a photonic interposer that directly connects computing resources in an XPU pool with memory resources in a separate memory pool.

This would allow processors to access larger and more flexible quantities of memory rather than depending entirely upon the HBM physically attached to each accelerator. The architecture remains a roadmap rather than a commercial product, but its direction is important. The world’s leading HBM supplier believes future memory systems will increasingly require optical as well as electrical connectivity.

Why This Matters More Than Another CPO Announcement Investors have been hearing about CPO for several years, creating understandable skepticism about whether every new roadmap represents a meaningful commercial development. In this case, two factors make the announcement more important.

First, CPO has entered production.

In May, Nvidia Corp. (NASDAQ: NVDA) announced that its Spectrum-X Ethernet Photonics switches were in production as part of the Vera Rubin infrastructure ramp. The platform uses CPO and 200-gigabit-per-second serializer/deserializer technology to support networks connecting extremely large numbers of AI accelerators.

Nvidia says Spectrum-X Ethernet Photonics provides five times better power efficiency, five times longer AI-system uptime, and 1.3 times faster deployment than networks based on traditional transceivers. CoreWeave, Lambda, and Oracle Cloud Infrastructure are among the first identified adopters.

The production announcement moved CPO beyond a laboratory demonstration or conference prototype. Data center customers can now begin deploying the technology within commercial AI infrastructure.

Second, SK hynix is not an optical-component manufacturer attempting to create demand for its own products. It is the leading supplier of the HBM used with Nvidia accelerators. Its decision to publish a roadmap for processor-to-memory optical architecture provides independent confirmation that data movement is becoming a system-level constraint.

Nvidia validates the near-term CPO market in network switches. SK hynix expands the long-term opportunity toward memory and compute.

Coherent participates in both.

Coherent Has More Than a Laser Position The immediate temptation is to frame CPO primarily as an external-laser opportunity. That interpretation is incomplete for Coherent because the company supplies a considerably broader collection of components.

A CPO system must generate light, deliver it to the optical engine, modulate it with data, align it precisely, and transfer it into optical fiber. Each function requires specialized active and passive components.

High-power continuous-wave indium phosphide lasers provide the light. External laser-source modules move those lasers away from the hot switch package, improving thermal stability, reliability, and serviceability. Silicon-photonics integrated circuits modulate the light with data. Microlens arrays and fiber-attach units align the optical signal with the fiber, where extremely small deviations can increase loss and impair performance.

Coherent participates at each of these levels.

The company produces high-power indium phosphide continuous-wave lasers at its Sherman, Texas, facility. It integrates lasers with isolators and thermoelectric cooling into external laser-source modules. It designs silicon-photonics products and manufactures microlenses, polarization-maintaining fiber, prisms, and fiber-attach assemblies.

Coherent’s vertical participation does not guarantee that it will supply every component in a production platform. Nvidia and other customers will maintain multiple suppliers to reduce risk and preserve negotiating leverage. However, Coherent’s breadth gives it several opportunities to win content within the same system.

It also allows Coherent to optimize components as a coordinated optical platform instead of developing each product independently. That can become increasingly important as CPO architectures require tighter alignment, lower optical loss, higher laser power, and greater reliability.

According to Table 1, the optical transition is developing across several increasingly demanding stages. Coherent already generates substantial revenue from pluggable transceivers, is positioned in commercial CPO switching platforms, and could eventually address processor-to-memory optical architectures of the type proposed by SK hynix.

The progression matters because each stage increases the amount of optical content required to support an AI system. Pluggable optics connect discrete pieces of equipment. Switch CPO moves photonics onto the switching package. Processor-to-memory photonics could embed optical communication more deeply within the compute architecture.

That is why Coherent describes CPO as an expansion of its serviceable available market rather than merely a replacement for existing transceivers.

A Potential $15 Billion Market At its March 2026 Optical Fiber Communication investor presentation, Coherent estimated that the CPO serviceable available market could exceed $15 billion by 2030.

That forecast is a company estimate rather than an independent guarantee, but it illustrates the scale of the opportunity management believes is developing. More importantly, the estimate was based principally on CPO and near-packaged-optics adoption in switches and processors. SK hynix’s proposed memory-pooling architecture could increase the ultimate market by adding more optical interfaces around memory.

The addressable market should not be interpreted as revenue Coherent will automatically capture. The supply chain includes Lumentum Holdings Inc. (NASDAQ: LITE) in high-power lasers and external laser sources, Corning Inc. (NYSE: GLW) in optical fiber and connectivity, TSMC in silicon-photonics manufacturing and advanced packaging, and numerous companies supplying connectors, fiber assemblies, and optical engines.

Coherent’s advantage is not that it operates without competitors. It is that it competes across more individual CPO components than most publicly traded alternatives.

Lumentum may possess particularly strong exposure to the high-power external-laser bottleneck. Corning supplies essential fiber, alignment grooves, and connectivity products. Coherent combines laser and passive-optical technologies with transceivers, silicon photonics, fiber attachment, and advanced manufacturing.

That breadth gives Coherent several potential revenue paths as customers determine which CPO architectures reach volume production.

The Commercial Evidence Is Already Building Coherent is not relying solely upon SK hynix’s future roadmap.

The company disclosed at OFC 2026 that it had secured very-high-volume, multiyear orders from a market-leading AI data center customer for CPO solutions. The products include high-power continuous-wave lasers and external laser sources manufactured using Coherent’s expanding 6-inch indium phosphide platform.

Coherent has also demonstrated a socketed 6.4-terabit silicon-photonics CPO platform. The demonstration combined an external laser source, an internally produced indium phosphide continuous-wave laser, an isolator, thermoelectric cooling, polarization-maintaining fiber, microlenses, and fiber-attach technology.

The importance is not simply the 6.4-terabit data rate. The demonstration showed that Coherent can integrate active and passive technologies drawn from multiple portions of its portfolio into a working CPO architecture.

The company’s Sherman facility is ramping high-power continuous-wave lasers on 6-inch indium phosphide wafers. Moving from 3-inch to 6-inch wafers increases the available manufacturing area by approximately four times, allowing more devices to be fabricated during each process cycle. Coherent has reported that yields on its 6-inch platform have exceeded those of its older 3-inch lines.

This manufacturing transition is essential because the CPO opportunity cannot be monetized through technical demonstrations alone. Coherent must produce large quantities of high-power lasers with consistent performance, reliability, and acceptable cost.

Nvidia’s March agreement provided additional validation. The company invested $2 billion in Coherent as part of a multiyear, nonexclusive strategic partnership covering advanced optical technology, manufacturing expansion, research and development, and future capacity access. The agreement also includes a multibillion-dollar purchase commitment.

Nvidia made a parallel investment in Lumentum, confirming that it intends to maintain multiple laser suppliers. But its willingness to invest directly in Coherent demonstrates that the company’s manufacturing capacity and technology have become strategically important to Nvidia’s AI roadmap.

Coherent’s Current Revenue Acceleration CPO offers substantial future upside, but investors do not need to wait for processor-to-memory photonics to justify Coherent’s current AI position. Its established optical business is already converting higher AI infrastructure spending into revenue growth and margin expansion.

During Coherent’s fiscal fourth quarter, Data Center and Communications revenue increased 59% year over year and 19% sequentially to $1.62 billion. The segment reached 79% of total company revenue, compared with a much smaller contribution from the Industrial business.

Total quarterly revenue increased 34% year over year to $2.05 billion, or 42% on a pro forma basis excluding divested operations. Non-GAAP gross margin expanded by 215 basis points to 40.2%, while adjusted earnings increased to $1.74 per share from $1.00 one year earlier.

For fiscal 2026, Data Center and Communications revenue increased approximately 40% to $5.27 billion. Coherent’s full-year revenue reached $7.12 billion, increasing 23% on a reported basis and approximately 28% on a pro forma basis.

Management guided fiscal first-quarter 2027 revenue to between $2.2 billion and $2.4 billion, with non-GAAP earnings of $1.85 to $2.05 per share. The midpoint of the revenue range would represent another sequential increase of approximately 12%.

The current growth is being driven primarily by conventional optical products rather than the longer-term CPO opportunity. Coherent is shipping 800G transceivers while rapidly ramping 1.6T products across multiple customers. The higher-speed products carry higher initial average selling prices and can improve product mix as manufacturing yields rise.

This provides an important balance to the investment case. Coherent does not require immediate mass adoption of SK hynix’s photonic-memory architecture. Its current optical business is already growing quickly, while CPO and processor-to-memory connectivity add longer-term optionality.

From SiC Tailwinds to AI Optical Growth The longer-term revenue record shows how completely Coherent’s growth engine has changed. The fiscal 2022 baseline is important because the Materials operation initially expanded strongly in fiscal 2023 before weaker consumer electronics and the EV-driven SiC retrenchment reduced revenue.

According to Table 2, Networking revenue increased 55.6% from fiscal 2022 through fiscal 2025, while Materials declined 14.7% and legacy Coherent Lasers declined 5.6%. The smaller decline in Lasers should not be interpreted as evidence that the acquired business produced a superior return. II-VI paid approximately $7.1 billion for legacy Coherent and assumed substantial debt and integration costs for a business that subsequently generated little revenue growth.

Note: The fiscal 2022 Lasers figure represents legacy Coherent’s trailing-12-month pro forma revenue. Networking and Materials reflect II-VI’s recast segment results.

The Materials decline does not invalidate the SiC investment thesis that existed in 2023. Materials initially increased 20.6%, from $1.119 billion in fiscal 2022 to $1.350 billion in fiscal 2023, consistent with Coherent’s disclosure that SiC revenue had grown more than 40%.

Most of the fiscal 2024 Materials contraction resulted from a significant consumer-electronics customer’s design change. The later weakness reflected slowing automotive and SiC demand as the U.S. EV market retrenched. That reversal was becoming identifiable in early 2024 before it became fully visible in Coherent’s annual results.

Materials also retained considerable economic value. Fiscal 2025 Materials revenue declined 6%, but segment profit increased 19% to $355 million because of better product mix, improved pricing, and lower manufacturing costs.

Networking produced a fundamentally different result. Revenue increased from $2.198 billion in fiscal 2022 to $3.421 billion in fiscal 2025, before Data Center and Communications accelerated further in fiscal 2026.

Optical networking became the growth platform that SiC appeared capable of becoming before the EV downturn. The difference is that optical demand is now being supported simultaneously by Nvidia’s product roadmap, hyperscaler capital spending, the transition from 800G to 1.6T transceivers, CPO commercialization, and the potential movement of photonics toward processors and memory.

The historical numbers therefore add an important dimension to the SK hynix announcement. Coherent is not attempting to build an optical business around an unproven technology roadmap. It is extending the strongest-performing part of its existing portfolio into another layer of AI infrastructure.

Why the Market Could Still Be Underestimating Coherent Coherent’s share price already reflects substantial enthusiasm for AI optical networking. The stock cannot be characterized as an undiscovered or conventionally inexpensive company based on trailing GAAP earnings.

The possible mispricing lies elsewhere. Investors may be valuing Coherent primarily as a supplier of faster generations of pluggable optical transceivers. That captures the existing 800G-to-1.6T transition but does not necessarily capture the full expansion of optical content inside future AI systems.

If CPO merely replaces pluggable transceivers one-for-one, the investment opportunity would be less compelling because revenue would migrate between product categories rather than create a substantially larger market.

Coherent’s argument is that CPO expands the market because optics begins replacing copper in additional connections. The optical content moves from the front panel of a switch closer to the switching ASIC, then toward processors, and potentially toward pools of memory.

SK hynix’s roadmap supports that argument. It does not present CPO as a different packaging format for the same network connection. It presents optical communication as part of a restructured computing and memory architecture.

That is a significantly larger vision—and one in which Coherent’s broad component portfolio becomes more valuable.

Risks Remain Substantial The principal risk is adoption timing. SK hynix’s photonic-interposer architecture remains a technology roadmap, not a product with a disclosed manufacturing date or customer commitment. Processor-to-memory optical links will require new standards, packaging techniques, memory controllers, software, and system architectures.

CPO also creates reliability and serviceability challenges. Integrating optical engines close to a hot switch ASIC can complicate manufacturing and repair. External laser sources solve part of the problem by keeping replaceable lasers away from the hottest silicon, but fiber coupling and optical alignment must remain stable under demanding operating conditions.

Customer concentration presents another concern. AI optical demand is driven by a relatively small number of hyperscalers and accelerator-platform companies. Large customers can change architectures, qualify competing suppliers, or alter deployment schedules. Nvidia’s agreement is nonexclusive, and Coherent must continue competing with Lumentum and other suppliers for content.

Coherent is also investing heavily to expand capacity. Capital expenditures reached approximately $1.10 billion during fiscal 2026, while rapid growth increased working-capital requirements. Converting orders into profitable revenue will depend upon manufacturing yields, utilization, and execution across multiple facilities.

Finally, strong demand does not eliminate valuation risk. Investors have already rewarded optical companies for anticipated AI growth. Any delay in 1.6T deployments, CPO production, or hyperscaler capital spending could produce substantial share-price volatility.

These risks argue against treating the SK hynix announcement as an immediate earnings event. Its importance is strategic: it increases the number of AI connections that could eventually become optical.

Investor Takeaway SK hynix’s announcement is not simply another endorsement of CPO. It expands the technological objective.

Nvidia has already moved co-packaged optics into production for Ethernet switches. SK hynix is now proposing an architecture in which optical links connect processors directly with pooled memory resources. The combination suggests that photonics is progressing from data center networking toward the internal architecture of AI computing systems.

Coherent is unusually well positioned for that progression because it does not depend upon a single optical component. The company supplies indium phosphide lasers, external laser sources, silicon photonics, microlenses, optical circuit switches, polarization-maintaining fiber, and fiber-attach assemblies. It has demonstrated an integrated 6.4T CPO platform and has secured very-high-volume, multiyear orders from a leading AI data center customer.

The revenue record supports the thesis. Networking increased 55.6% between fiscal 2022 and fiscal 2025, while the company’s Data Center and Communications segment grew another 59% year over year during the latest quarter. Total quarterly revenue reached $2.05 billion, and management expects as much as $2.4 billion in the current quarter. Nvidia’s $2 billion investment provides additional validation and supports the capacity expansion required to meet future demand.

The SK hynix roadmap adds something not fully reflected in those current results. If optical connectivity moves from switches toward processors and memory, Coherent’s addressable market increases without requiring the company to abandon its existing transceiver business. Pluggable optics, optical circuit switching, CPO, and processor-to-memory photonics can coexist as separate layers of the same AI infrastructure.

Coherent estimates that CPO alone could become a market exceeding $15 billion by 2030. SK hynix’s entry into the discussion suggests that even this estimate may not capture the full long-term opportunity if memory architectures become increasingly optical.

Coherent is already helping AI systems move data between servers and switches. SK hynix has now provided a roadmap for moving optics directly toward compute and memory. That development makes Coherent more than a beneficiary of the current transceiver cycle. It positions the company for a broader architectural change in how future AI systems are connected.

Contact [email protected] for any questions or corrections.

Key Takeaways Coherent appears better positioned, backed by faster expected growth, estimate momentum and a lower valuation.COHR expects fiscal 2027 sales and EPS growth of 50% and 67%, with EPS estimates trending higher.APP offers stronger margins and cash generation, but its richer valuation weigh on appeal. Coherent Corp. (COHR - Free Report) and AppLovin Corporation (APP - Free Report) are both high-growth technology companies benefiting from the broader expansion of artificial intelligence. Coherent supports AI infrastructure through optical networking, lasers, and communications technologies used in data centers and high-speed connectivity. AppLovin applies AI through its Axon advertising platform to improve targeting, monetization and performance marketing. Both stocks attract growth-oriented investors seeking exposure to companies with strong AI-related demand, expanding markets and significant long-term earnings potential.

COHR: Optical Demand Drives Strong GrowthCoherent's latest results show how rapidly AI infrastructure demand is reshaping its business. Fiscal fourth-quarter revenues crossed $2 billion, beating the Zacks Consensus Estimate by 2.7% and rising 33.8% year over year and 13.3% sequentially. Full-year revenues increased 22.5% to a record $7.1 billion. The Datacenter & Communications segment generated $1.6 billion in quarterly revenues, up 58.6% year over year, and accounted for about 79% of the total. However, Industrial revenues declined 15.8% to $430.5 million, making Coherent increasingly dependent on AI networking and optical connectivity.

Profitability improved along with sales. Non-GAAP gross margin reached 40.2%, while non-GAAP operating income jumped 62.1% to $446 million and the related margin expanded to 21.8%. Adjusted earnings of $1.74 per share increased 74% and beat the consensus mark by 7.4%. Better manufacturing yields, lower input costs, pricing actions and the shift to six-inch indium phosphide production supported the gains. The six-inch process can produce roughly four times the output at about half the cost of the older three-inch platform, improving Coherent's ability to convert demand into earnings.

The near-term outlook remains compelling. Coherent expects first-quarter fiscal 2027 revenues of $2.2-$2.4 billion. The $2.3 billion midpoint implies about 12.4% sequential growth, while the adjusted EPS guidance midpoint of $1.95 suggests another earnings step-up. Demand visibility extends into calendar 2028, supported by long-term agreements and ramps in 800-gigabit and 1.6-terabit transceivers, optical circuit switching, co-packaged optics and PhotonLink. These opportunities give Coherent substantial long-term growth potential.

The challenge is funding that expansion efficiently. Fourth-quarter capital expenditures reached $556 million, full-year property, plant and equipment additions surged 150.2% to $1.103 billion, and annual operating cash flow fell 87.5% to $79.5 million. Inventory increased 79.5% to $2.581 billion as the company prepared for higher output. Cash rose to $1.162 billion and total debt declined to $3.222 billion, but capacity constraints, heavy spending and weak Industrial demand leave execution and cash-conversion risks elevated.

APP: AI Advertising Delivers Exceptional EconomicsAppLovin continues to post faster growth and much stronger cash generation. Second-quarter 2026 revenues rose 52.4% year over year to $1.92 billion, although they missed the Zacks Consensus Estimate by 0.8%. Adjusted earnings increased 66.4% to $3.76 per share and beat the consensus mark by 1.1%, extending the company's streak of earnings beats to four quarters. Adjusted EBITDA climbed 58% to $1.61 billion, or about 83.9% of revenues, while free cash flow totaled $863 million. This combination highlights the operating leverage of AppLovin's AI-driven advertising platform.

Management's third-quarter guidance points to renewed momentum. The $2.07 billion revenue midpoint implies about 7.8% sequential growth, nearly double the second quarter's pace of 4%. The adjusted EBITDA midpoint of $1.725 billion indicates 7.1% sequential growth, with the margin expected to remain near 83%. Importantly, the outlook incorporates model enhancements already deployed after the June quarter. Consumer-advertiser spending also reached a record, up 28% from fourth-quarter 2025 levels, supporting AppLovin's effort to diversify beyond gaming.

AppLovin's balance sheet provides additional flexibility. The company ended the quarter with $3.05 billion in cash and $3.7 billion in debt, while net leverage was only about 0.1 times trailing adjusted EBITDA. It also repurchased or withheld approximately 1.14 million shares for $551 million. Risks remain: gaming-model improvements can arrive unevenly, AI compute costs are rising, and creative-production and onboarding bottlenecks could slow consumer expansion. These concerns, together with a slight revenue miss, contributed to the stock's roughly 17% post-earnings decline despite healthy underlying demand.

How Do Zacks Estimates Compare for COHR & APP?The Zacks Consensus Estimate for APP’s 2026 sales indicates year-over-year growth of 40%, and that for earnings indicates a year-over-year increase of 55%. EPS estimates have been trending downward over the past 60 days.

                                                                      Image Source: Zacks Investment Research

The Zacks Consensus Estimate for COHR’s fiscal 2027 sales and EPS indicates year-over-year growth of 50% and 67%, respectively. EPS estimates have been trending upwards over the past 60 days.

                                                              Image Source: Zacks Investment Research

COHR’s Valuation More Attractive Than APPCOHR is trading at a forward price-to-sales multiple of 5.01X, below its 12-month median of 5.25X. APP’s forward price-to-sales multiple stands at 10.81X, below its median of 19.47X.

Coherent Appears Better PositionedCoherent appears better positioned for investors seeking a more balanced AI growth opportunity, supported by stronger earnings-estimate momentum, faster expected growth and a more attractive valuation. Demand for AI-driven optical networking continues to accelerate, while improving manufacturing efficiency and a favorable product mix are strengthening margins. The company also enjoys extended demand visibility across advanced transceivers, optical circuit switching and co-packaged optics. Although AppLovin offers superior margins, cash generation and balance-sheet flexibility, and its AI-powered advertising platform is expanding, its richer valuation and downward earnings-estimate revisions temper its appeal.

While COHR carries a Zacks Rank #2 (Buy), APP has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.