COHR

COHR — Coherent Corp

TL;DR

Coherent is the broadest vertically integrated photonics company in public markets: in-house EMLs, CW lasers, VCSELs, silicon photonics PICs, OCS, and finished transceiver modules — everything except DSPs. CEO Jim Anderson: “This is probably the best time ever in the history of optical communications.”¹ CY2026 bookings are mostly filled; CY2027 is filling fast.² The Nvidia $2B equity + multibillion supply agreement for CW lasers (critical for CPO) is the clearest anchor on the demand side.³ Bear case: jack-of-all-trades vs. specialists at each layer, with Broadcom having the deeper CPO system integration and Lumentum having stronger EML epitaxy.²

Business

Formed from three major acquisitions: Finisar (2019, $3.2B—VCSELs,transceivermodules),CoherentInc.(2022,$6.6B — industrial lasers), and the parent II-VI rebranded to Coherent Corp in September 2022. Two segments: Datacenter & Communications (~72% of revenue, high-growth, riding AI optical buildout) and Industrial (~28%, includes ASML/OLED excimer lasers, SiC substrates — slow-growth but sticky). Revenue grown from $4.73BinFY2024to$6.7B annualized run rate; gross margins expanded ~500 bps to ~39%; leverage reduced from >3x to 1.7x; EPS scaled from $1.21to>$5 run-rate; included in S&P 500.²

Thesis

• 6-inch InP production platform. Industry-first 6-inch InP ramping across four fabs (Fremont CA, Sherman TX, Jarfalla Sweden, Zurich Switzerland), launched Aug 2025. Economics: 4× devices per wafer at ~half the cost vs. legacy 3-inch lines; capacity doubling this year. Management says yields on EMLs, CW lasers, and photodetectors are already exceeding 3-inch yield levels. Lumentum is on 3→4-inch; Broadcom on 3-4-inch. If 6-inch yields hold at scale, Coherent’s cost structure advantages compound over the next 18–24 months.²
• CW laser / CPO anchor — Nvidia supply agreement. Nvidia awarded Coherent (and Lumentum) $2B equity investments plus multibillion-dollar supply agreements in March 2026. Coherent’s CW lasers are explicitly covered — these are the continuous-wave light sources needed for silicon-photonics-based CPO modules. Nvidia’s CPO roadmap (Rubin Ultra and Feynman) is the pull-through event.²³
• Five growth vectors stacking. Existing: pluggable transceivers (800G → 1.6T → 3.2T), DCI coherent transceivers, components. New incremental SAM (>$20B by 2030): OCS, CPO, multi-rail, thermal. Management says CY2026 mostly booked, CY2027 “filling very, very quickly,” FY2027 revenue growth to exceed FY2026.²¹
• OCS (Optical Circuit Switches) emerging. Liquid-crystal-based OCS (non-mechanical, no moving parts), competing with Lumentum’s MEMS-based OCS. Revenue shipments began Q4 FY2025; 10+ customers engaged, multiple real datacenter deployments. OCS SAM doubled from $2Bto$4B in one year.²¹
• DSP-agnostic transceiver positioning. Coherent ships 1.6T transceivers with three different DSP solutions at OFC 2026 — positioning as the flexible hardware partner vs. Broadcom which ties laser + DSP + switch together. Hyperscalers with multi-vendor DSP strategies benefit from Coherent’s optionality.²

Risks

• 6-inch InP yield uncertainty at scale. Pilot yield data is positive, but transition from 3-inch to 6-inch at volume is unproven. Lumentum’s EML epitaxy is reportedly still ahead on performance — Coherent still sources some EMLs externally from Lumentum.²
• InP substrate supply chain. 70% of global indium comes from Chinese zinc smelters, subject to export permit requirements with multi-month processing times. CEO says >5 substrate suppliers with 3-to-5-year contracts in place; management has multi-year commitments secured. Still a tail risk given geopolitical trajectory.²
• Broadcom as deeper CPO integrator. Broadcom can offer laser + DSP + switch silicon on a single package. Coherent’s DSP-agnostic approach is flexible for hyperscalers that want best-in-class at each layer, but hyperscalers that want one-stop-shop will favor AVGO’s integrated stack.²
• BIS / Huawei investigation unresolved. Chinese module vendors (InnoLight, Eoptolink) are winning 800G volume. Any BIS restriction that limits Coherent’s China revenue or supply is a downside risk.²
• Industrial segment as a drag. 28% of revenue in a slow-growth industrial segment with ASML/OLED as primary customers. Any semiconductor equipment spending slowdown (or ASML revenue softness) flows through.²

Recent catalysts

• 2026-04-01 — Chipstrat: Coherent vertical integration deep dive — 6-inch InP leading competitors; five growth vectors mapped; bull/bear framework laid out.²
• 2026-03-27 — OFC 2026: Coherent demonstrated 400G Differential EML (for 3.2T/6.4T), 400mW CW laser for CPO, silicon photonics 400G PN-junction Mach-Zehnder Modulator. VCSEL NPO at 100G/lane demo (vs Lumentum’s 32G/lane).³
• 2026-03-23 — FundaAI OFC takeaway: CEO Jim Anderson quote; OCS SAM doubled to $4B; CY2027 filling fast; earnings estimates revised up.¹
• 2026-03-02 — Nvidia $2Bequityinvestment+multibillionsupplyagreement(Coherent+Lumentumbothreceived$2B from Nvidia on the same day).³

Second-order reads

• 2026-04-01 — Chipstrat, Coherent’s Vertical Integration Strategy — 6-inch InP cost advantage could pressure Lumentum margin as shared InP market gains a new lower-cost supplier → watch LITE margins as Coherent’s 6-inch ramp matures.
• 2026-03-27 — Irrational Analysis, OFC 2026 Recap — Nvidia CPO roadmap (Rubin Ultra inter-rack) is the demand event for CW lasers → positive second-order for FN (transceiver contract manufacturing), AAOI (EML supplier), MTSI (CDR/TIA components).
• 2026-03-23 — FundaAI, Weekly OFC Takeaways — MU crushed expectations; HBM supply shortage persists → positive for MU.

Valuation & positioning

Stock ran from $45to$250 in 15 months (as of 2026-04-01). Chipstrat notes COHR trades at ~44× forward earnings vs. Lumentum at ~60× — lower multiple despite comparable vertical integration thesis. Leverage at 1.7x leaves room for capital return as FCF scales.²

Sources

Related

LITE — closest competitor in EMLs, OCS, CPO laser supply; both received $2B Nvidia investment AVGO — deeper CPO system integrator (laser + DSP + switch); COHR DSP-agnostic AAOI — EML supplier; competes/overlaps with COHR on AI transceiver lasers FN — contract transceiver manufacturer; captures volume regardless of laser vendor MTSI — CDR/TIA components in transceivers CIEN — DCI coherent transceiver market overlap NVDA — primary CPO demand driver (Rubin Ultra CPO); Nvidia supply agreement anchor

Footnotes

1. COHR OFC Takeaways, MU Crushes — 2026-03-23 ↩ ↩² ↩³ ↩⁴

2. Chipstrat — Coherent’s Vertical Integration Strategy — 2026-04-01 ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹ ↩¹⁰ ↩¹¹ ↩¹² ↩¹³ ↩¹⁴ ↩¹⁵

3. Irrational Analysis — OFC 2026 Irrational Recap — 2026-03-27 ↩ ↩² ↩³ ↩⁴