SAXONBURG, Pa., May 9, 2026, 18:03 EDT
- Coherent shares finished Friday at $335.26, rising 5.03% after shaking off a volatile spell following earnings. U.S. markets didn’t open Saturday.
- The company is projecting fiscal fourth-quarter revenue in a range of $1.91 billion to $2.05 billion, topping the $1.91 billion estimate from analysts polled by LSEG.
- It’s no longer a question of demand—execution is front and center. Coherent is scrambling to ramp up production of indium phosphide, the semiconductor material critical for high-speed optical chips.
Coherent Corp shares bounced back Friday, climbing 5.03% to finish at $335.26. Investors took another look at the company’s hefty AI data-center order pipeline, weighing it against margins that aren’t improving as quickly as hoped—a dynamic now at the core of the optical networking surge. The stock had dropped after its results a day earlier.
The clock’s a factor here. AI infrastructure spending isn’t just chips anymore—it’s hitting lasers, fiber, and all the optical kit needed to shuttle data around giant clusters. That shift is pulling names like Coherent and Lumentum deeper into the market’s AI hardware race. Corning’s latest fiber expansion, with backing from Nvidia, is another sign: the bottleneck has jumped from inside the processor to the links connecting them.
Coherent reported a 21% jump in fiscal third-quarter revenue, reaching $1.81 billion. Adjusted earnings landed at $1.41 per share. Non-GAAP gross margin climbed to 39.6%, marking an improvement of 105 basis points from the same period last year.
Chief Executive Jim Anderson cited “exceptionally strong” demand in both data-center and communications segments, noting Coherent is stepping up capacity in response to AI-driven infrastructure buildouts. Revenue gains and wider gross margins boosted earnings, according to Chief Financial Officer Sherri Luther, who also pointed to ongoing capital investment. Coherent Inc
Nearly three-quarters of the revenue last quarter came from the data-center and communications segment, according to Coherent. Data-center sales climbed 13% from the prior quarter and jumped 37% compared to last year. For this quarter, the company is betting on demand for optical transceivers and optical circuit switches.
Supply, though, remains the sticking point. Anderson described indium phosphide as “the key constraint” for both Coherent and peers, but said the company now aims to double its internal capacity a quarter ahead of schedule—and to more than double it again by the close of calendar 2027. That shift to 6-inch wafers isn’t minor: it means more devices, lower unit costs, and a move away from the slower, pricier 3-inch lines. The Motley Fool
Nvidia’s hooked in. According to Coherent’s latest quarterly report, Nvidia put $2 billion into the company in March through a private deal. The two also signed a strategic agreement covering multiple years—a pact that involves multi-billion-dollar purchase commitments and gives Nvidia rights to capacity on advanced laser and optical networking gear.
Wall Street’s still waiting for that AI boom to really show up in margins. Barclays analysts noted gross margins climbed just 100 basis points from a year ago, even with the bump in data-center revenue, exits from some businesses, and increased volume. Margin gains, or the lack of them, keep coming up as one of the main talking points after results, Stifel analysts pointed out.
Luther wasn’t on board with the suggestion. She noted Coherent’s gross margin has moved up in seven out of the last eight quarters, and the company is still aiming for north of 42%. Cost cuts, better yields and pricing are what she called out as the drivers.
The peer check continues to look favorable. Lumentum—a competitor making photonic gear for AI-related data infrastructure—put out a fourth-quarter revenue projection of $960 million to $1.01 billion, topping the analyst consensus of $908.3 million. Reuters noted customers are now locking in longer-term contracts, chasing limited supply.
The risks here aren’t trivial. Coherent’s filing flagged that global trade snags could hit revenue, squeeze margins through pricier materials, or slow down production. It’s not just them—CoreWeave has bumped up its minimum 2026 capex guidance, blaming pricier components. Should Coherent’s ramp fall behind, or if fresh supply shows up with disappointing margins, the stock may keep behaving more like a bottlenecked manufacturer than an AI pure play.
Right now, demand holds up. The tougher part? Coherent has to convert backlog to shipments—and make those shipments boost margins—before investors lose patience.
