Coherent's stock surges 18% on strong demand for AI-optimized optical components.
Shares of Coherent Corp. jumped more than 17% in morning trading Tuesday, reaching $427.42 as investor enthusiasm for the photonics company's critical role in artificial intelligence data center infrastructure continued to drive significant gains. As of 11:19 a.m. EDT, Coherent shares had climbed $64.52, or 17.78%, on the New York Stock Exchange. The move pushed the company's market capitalization above $83 billion, extending a remarkable rally that has seen the stock more than quadruple over the past year amid the AI boom.
Coherent's surge builds on robust fiscal 2026 performance fueled by explosive demand in its Datacenter & Communications segment. In the fiscal third quarter ended March 2026, the company reported revenue of $1.81 billion, up 21% from the prior year, with the data center business contributing significantly through 800G and emerging 1.6T transceiver shipments. For the nine months ended March 2026, revenue reached $5.07 billion. Book-to-bill ratios in data center products have exceeded 4x in recent quarters, signaling substantial backlog and future revenue visibility. The segment's strength reflects Coherent's ability to address the "connectivity bottleneck" in AI clusters, where faster optical links are required to support massive parallel computing.
A landmark $2 billion strategic equity investment from NVIDIA in early 2026 has further validated the company's technology, including multi-year purchase commitments and collaboration on next-generation optics for AI data centers. Coherent has consistently beaten Wall Street expectations, with fiscal first-quarter 2026 results showing sales and earnings ahead of forecasts and upbeat guidance for the second quarter projecting revenue between $1.56 billion and $1.7 billion. The stock's inclusion in the S&P 500 earlier in 2026 triggered additional buying from index-tracking funds, while analysts have responded positively, raising price targets following earnings and conference presentations.
Under CEO Jim Anderson, Coherent has sharpened its strategy around high-growth photonics markets, with the company continuing restructuring efforts to optimize its portfolio, including divestitures that strengthened the balance sheet. The company has invested heavily in capacity expansion, including new facilities for advanced wafer production in indium phosphide and silicon photonics platforms, aiming to reduce reliance on external suppliers and improve margins as demand outpaces supply in the AI sector. Gross margins have shown sequential improvement, supported by vertical integration and higher-value AI products. While risks include execution on capacity ramps and potential competition in the optical components space, most analysts maintain bullish stances, highlighting Coherent's differentiated technology and strong order momentum as reasons for sustained optimism.