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Is There Longevity in Coherent's AI-Backed Growth Strategy?
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Key Takeaways
Coherent's datacenter & communications revenues jumped 33.5% y/y, making up 72% of the total sales.
COHR saw margin expansion and strong demand, driven by 800G and 1.6T transceiver adoption growth.
Coherent boosted guidance as AI-driven datacenter demand and market opportunities expand the pipeline.
Coherent Corp.’s (COHR - Free Report) focus on AI and Datacom is yielding tangible results, positioning the company to benefit from the expanding AI and high-performance computing markets. In the second quarter of fiscal 2026, the company recorded 33.5% year-over-year growth in its data center & communications segment’s revenues. This segment generated a whopping 72% of the top line, a significant increase from the year-ago quarter’s 63%.
COHR’s adjusted operating margin expanded by 140 basis points (bps) year over year in the second quarter of fiscal 2026, highlighting its success within the high-margin AI market. This highly promising performance is backed by the company’s future product pipeline. The company reported a surge in its product demand due to growing direct bookings. The steep adoption of 800G and 1.6T transceivers was a prominent factor boosting the top line.
Coherent was successful on the Indium Phosphide (InP) front as well, ramping up 6-inch InP production in Sherman and Jarfalla to address the rising transceiver demand. The company witnessed growing opportunities as the Optical Circuit Switch Systems market added more than $2 billion in addressable market opportunity in the long haul.
Banking on these positives, management hiked the top and bottom-line guidance continually over the past few quarters, signaling the anticipated strong support of AI-fueled datacenter demand. Therefore, it is certain that growth is not a mere coincidence, but a direct influence of COHR’s business blossoming in an environment where datacenters are shouldering immense AI workload.
COHR’s Price Performance, Valuation & Estimates
The stock skyrocketed 448.5% in a year, outperforming the industry’s 29.6% growth and the 31.5% rise of the Zacks S&P 500 Composite. COHR’s industry peer Dave (DAVE - Free Report) and GDS Holdings (GDS - Free Report) have surged 134.5% and 104.7%, respectively.
1-Year Share Price Performance
Image Source: Zacks Investment Research
From a valuation perspective, COHR trades at a 12-month forward price-to-earnings ratio of 44.46X, higher than the industry’s 21.26X. Dave and GDS Holdings appear more affordable, with forward 12-month price-to-earnings ratios of 12.53X and 27.53X, respectively.
P/E - F12M
Image Source: Zacks Investment Research
Coherent and GDS Holdings carry a Value Score of D, while Dave has a Value Score of C.
The Zacks Consensus Estimate for COHR’s earnings for fiscal 2026 and 2027 has increased marginally and 2.2%, respectively, over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Is There Longevity in Coherent's AI-Backed Growth Strategy?
Key Takeaways
Coherent Corp.’s (COHR - Free Report) focus on AI and Datacom is yielding tangible results, positioning the company to benefit from the expanding AI and high-performance computing markets. In the second quarter of fiscal 2026, the company recorded 33.5% year-over-year growth in its data center & communications segment’s revenues. This segment generated a whopping 72% of the top line, a significant increase from the year-ago quarter’s 63%.
COHR’s adjusted operating margin expanded by 140 basis points (bps) year over year in the second quarter of fiscal 2026, highlighting its success within the high-margin AI market. This highly promising performance is backed by the company’s future product pipeline. The company reported a surge in its product demand due to growing direct bookings. The steep adoption of 800G and 1.6T transceivers was a prominent factor boosting the top line.
Coherent was successful on the Indium Phosphide (InP) front as well, ramping up 6-inch InP production in Sherman and Jarfalla to address the rising transceiver demand. The company witnessed growing opportunities as the Optical Circuit Switch Systems market added more than $2 billion in addressable market opportunity in the long haul.
Banking on these positives, management hiked the top and bottom-line guidance continually over the past few quarters, signaling the anticipated strong support of AI-fueled datacenter demand. Therefore, it is certain that growth is not a mere coincidence, but a direct influence of COHR’s business blossoming in an environment where datacenters are shouldering immense AI workload.
COHR’s Price Performance, Valuation & Estimates
The stock skyrocketed 448.5% in a year, outperforming the industry’s 29.6% growth and the 31.5% rise of the Zacks S&P 500 Composite. COHR’s industry peer Dave (DAVE - Free Report) and GDS Holdings (GDS - Free Report) have surged 134.5% and 104.7%, respectively.
1-Year Share Price Performance
From a valuation perspective, COHR trades at a 12-month forward price-to-earnings ratio of 44.46X, higher than the industry’s 21.26X. Dave and GDS Holdings appear more affordable, with forward 12-month price-to-earnings ratios of 12.53X and 27.53X, respectively.
P/E - F12M
Coherent and GDS Holdings carry a Value Score of D, while Dave has a Value Score of C.
The Zacks Consensus Estimate for COHR’s earnings for fiscal 2026 and 2027 has increased marginally and 2.2%, respectively, over the past 60 days.
COHR currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.