SAXONBURG, Pennsylvania, May 6, 2026, 17:01 EDT
Coherent Corp. dropped roughly 6% after hours Wednesday, despite the photonics supplier beating fiscal third-quarter revenue expectations and projecting results above what Wall Street had penciled in—a clear sign investors were looking for more from a name riding this year’s AI-infrastructure boom. Revenue came in at $1.81 billion, marking a 20.5% jump from the prior year, with adjusted earnings at $1.41 a share.
Coherent now finds itself under the AI data-center spotlight, moving beyond its roots in lasers and engineered materials. Datacenter & Communications revenue hit $1.36 billion, up from $968.7 million a year ago. Industrial, though, slipped—down to $444 million from $529.2 million.
AI pushes demand for speedy optical links—crucial for shuttling data across chips, servers, and sprawling data centers. Coherent claims its optical gear underpins networks for hyperscale data centers and global comms. The broader photonics segment? That’s everything from generating and shaping to detecting signals, serving data centers, communications, and industrial customers.
The stock had already factored in that move. Stifel’s Ruben Roy bumped Coherent’s price target up to $412 from $275 ahead of the print, keeping the firm’s Buy rating not just for Coherent but also on Lumentum and Ciena—the key competitors in optical networking.
Coherent came in with solid headline results. GAAP gross margin ticked up to 37.7%, while the non-GAAP figure—which excludes certain items—hit 39.6%. GAAP diluted EPS landed at 97 cents; adjusted earnings tallied $1.41 per share.
Analysts were caught off guard by a brighter forecast. Coherent is guiding for fourth-quarter fiscal 2026 revenue between $1.91 billion and $2.05 billion, with adjusted EPS in a $1.52 to $1.72 band. StockStory noted the revenue outlook’s midpoint lands 3.4% ahead of Wall Street targets, while the EPS midpoint tops the $1.54 consensus.
Chief Executive Jim Anderson described demand in datacenter and communications as “exceptionally strong,” noting Coherent is pushing to expand capacity with AI infrastructure scaling up. “We’re ramping our capital investment,” Chief Financial Officer Sherri Luther added, citing robust visibility into demand. GlobeNewswire
Still, the numbers gave bears something to work with. Adjusted operating income landed at $366 million, short of the $372.7 million analysts had called for, and free cash flow came in negative at $536.9 million, according to StockStory. The company’s cash-flow statement also reflected a jump in spending: additions to property, plant and equipment hit $547.2 million for the first nine months of fiscal 2026, up from $309.5 million in the prior year.
The key risk here: even if AI demand holds up, ramping up capacity might drain cash before those profits materialize. Coherent flagged other uncertainties, too—swings in end-market demand, shifts in how customers buy, tariffs, timing of product launches, and competition could all mean actual results stray from the current outlook.
Stifel’s note highlights that the conversation stretches well past a single quarter. Analysts pointed to longer-term order visibility and ongoing supply constraints for upstream laser components tied to optical networking. Among its picks, Stifel put Coherent at the top in optical networking, then named Ciena and Lumentum just behind.
Coherent delivered on key investor demands: quicker sales growth, stronger margins, and a raised outlook. But the after-hours slide points to a tougher next step — translating an AI optics surge into real cash, while holding onto the margin improvements that initially fueled the stock’s run.
