New York, June 22, 2026, 16:04 EDT
- Coherent finished the session just under a 52-week high as U.S. markets reopened after Friday’s Juneteenth holiday.
- The real catalyst isn’t just the $50 million CHIPS letter. It’s what the letter signals about U.S. indium phosphide capacity.
- China’s push for stricter indium checks has made Coherent’s Texas wafer expansion a supply-chain twist for AI data centers.
Coherent Corp. (NYSE:COHR) rallied 9.2% on Monday, closing at $425.38. The move brought the photonics supplier near its 52-week high as the AI trade continued to reward stocks tied to data transfer as well as compute. Trading volume reached 7.03 million shares, matching the 65-day average, so this wasn’t a light post-holiday session.
Coherent’s latest rally picked up after the NYSE reopened following Friday’s Juneteenth market holiday. The bigger story is capacity for indium phosphide, or InP. It’s a compound semiconductor that makes high-speed optical chips for moving data with light in AI data centers. The NYSE lists June 19 as the 2026 Juneteenth market holiday.
Coherent said it signed a letter of intent last week for as much as $50 million in CHIPS Act funding aimed at expanding its 6-inch InP plant in Sherman, Texas. The company said the project calls for doubling manufacturing space and increasing wafer output by four times. Wafers are the thin discs used to make chips.
The grant is minor compared to Coherent’s market cap. The real trigger is the capacity option. China accounts for close to 70% of global indium output and has increased export checks, Reuters said June 19. Indium phosphide has been on China’s export control list from February 2025.
Investors look like they’re paying up for a bottleneck. The $50 million doesn’t move an $80 billion equity story when it comes to subsidy math. But it makes a difference, helping turn Coherent’s Texas site into a hedge for a key raw material risk in AI networking.
“Indium phosphide photonics are essential” for fast data, Bill Frauenhofer, Executive Director for Semiconductor Investment and Innovation at the Department of Commerce, said in the government’s statement. Coherent CEO Jim Anderson also called semiconductor photonic devices “essential building blocks of AI infrastructure.” NIST Coherent Inc
A customer is anchoring the trade. In March, Nvidia and Coherent announced a multiyear deal that covers advanced optics, manufacturing, and R&D. Nvidia is putting $2 billion into Coherent and has made a multibillion-dollar commitment to buy. Nvidia CEO Jensen Huang said the companies will build AI infrastructure at “unprecedented scale, speed and energy efficiency.” NVIDIA Newsroom
Competition isn’t letting up. Lumentum (NASDAQ:LITE) also has an optics deal with Nvidia, and Marvell Technology (NASDAQ:MRVL) kicked off a sharp June move in optical-component stocks after Huang’s optical chip comments. Baptista analyst Ishan Majumdar told MarketWatch investors liked the idea of “optical content per AI rack” jumping soon. MarketWatch
The index angle is there, but not leading today. Coherent moved into the S&P 500 in March and is now a benchmark name instead of a niche stock. Back then, Reuters said index additions usually spark buying from funds tracking the index, bumping up demand and liquidity.
The downside is clear. Coherent’s stock is up roughly 130% so far this year, according to MarketWatch, and trades at a price-to-earnings ratio above 200. A CHIPS letter doesn’t guarantee money will hit the account. Export controls from China remain a risk, and slower demand from Nvidia in optics could hit the shares with little cushion.
