NEW YORK, June 17, 2026, 17:02 EDT
- Coherent shares dropped again, despite a U.S. pledge of funding for its indium phosphide plant in Texas.
- Nvidia’s Sherman expansion connects to its effort to lock in optical links for AI data centers.
- The trade is now up against valuation risk, supply issues, and questions about how quickly AI optics demand will turn into profits.
Coherent Corp shares dropped again Wednesday, after a 6.2% slide Tuesday, even with news of a $50 million U.S. manufacturing award for its Texas site. The stock traded at $378.85, off $3.79, or nearly 1%. TradingKey posted the prior day’s fall. tradingkey.com
Timing is key as Nvidia and other AI firms look for quicker ways to shift data between chips without the heat and energy loss linked to copper wires. Coherent’s Sherman site turns out indium phosphide, or InP, a compound semiconductor for photonic gear that pushes data with light in advanced AI data centers. NIST
The CHIPS Program Office at the U.S. Commerce Department on Tuesday said it signed a letter of intent for up to $50 million in direct funding to help Coherent expand its Sherman plant. The department called Sherman the first and largest high-volume 150mm (6-inch) indium phosphide semiconductor manufacturing site. NIST
Coherent said it will double manufacturing space and boost wafer output fourfold in an expansion that also extends its work with Nvidia. The company expects to add more than 1,000 jobs at the Sherman location, including over 550 advanced manufacturing, engineering, and technical positions. Coherent Inc
Nvidia is key to the project’s wider market impact. According to AP, Nvidia rolled out a big AI infrastructure upgrade in a $2 billion deal with Coherent. The plant will make laser material for chips that link together in one system. “AI factories are the infrastructure of the new industrial revolution,” Nvidia CEO Jensen Huang said in the AP report. AP News
Coherent CEO Jim Anderson said semiconductor photonic devices are “essential building blocks of AI infrastructure.” Bill Frauenhofer, executive director at Commerce for semiconductor investment and innovation, said InP photonics are “essential for enabling high speed data transmission” in AI, telecom and advanced networks. Coherent Inc
Stock stayed flat. TradingKey pointed to profit-taking, even with the federal funding update. Yahoo Finance, citing Zacks, noted Coherent’s forward earnings ratio at 48.27, more than twice the group average of 21.76. tradingkey.com
Coherent’s valuation comes with some history. Barchart said shares jumped 434.9% in the past year, which is way over the Technology Select Sector SPDR ETF’s 60.4% advance. Analysts rated it a “Strong Buy” anyway, Barchart noted, but the average target price at $372.21 was lower than where the stock traded at the time. Barchart.com
Nvidia earlier said it would invest $2 billion in both Coherent and Lumentum, Reuters reported in March. AXT and Japan’s Sumitomo Electric lead in InP substrate supply, which is important in the photonics chain. The market remains tight and targeted. Reuters
But supply is still the main risk. Reuters said China has tightened InP export licenses since February 2025, pushing the average price for a 6-inch InP wafer up 250% to $5,000 since the move. Konrad Wang, research analyst at SemiAnalysis, said the restrictions “ripple through the entire optical supply chain.” Paul Triolo at Albright Stonebridge called it part of a broader “materials chokepoint” toolkit. Reuters
Coherent’s win adds to Washington and Nvidia’s push for more U.S.-made photonics for AI data centers. Now, all eyes are on how fast the new capacity ramps and if margins hold up, as the shares already trade at a premium to peers. Coherent Inc
