COHR's AI-driven surge lifts datacenter revenues to 72% of sales, fueled by transceiver demand and InP production expansion.
Coherent Corp. COHR registered 33.5% year-over-year growth in its datacenter & communications segment’s revenues in the second quarter of fiscal 2026. This segment generated 72% of the top line, a significant jump from the year-ago quarter’s 63%. It is evident that the company is moving on its growth trajectory on the back of its success within the AI market.
The company witnessed a surge in its product demand as a result of rising direct bookings. The heightened adoption of 800G and 1.6T transceivers played an important role in boosting its top line. On the Indium Phosphide (InP) production front, Coherent is the only producer of the 6-inch InP, which it is ramping actively across Sherman and Jarfalla for the heightened transceiver demand. This boost in production is made to support the high-power CW laser demand that the company has anticipated to witness in the near term.
The rise in demand during the second quarter of fiscal 2026 was not only dependent on the growing demand for transceivers, but also for Optical Circuit Switch (OCS) Systems. The OCS Systems market adds more than $2 billion in addressable market opportunity in the long run, expanding its capacity to boost revenues.
COHR’s focus on the next-gen optical interconnects and InP manufacturing positions it to capture a larger chunk of the AI hardware market share. As the industry shifts toward complex components, Coherent will not remain a mere player in the AI domain but a game-changer of the infrastructure required to power it.
Image Source: Zacks Investment Research
From a valuation perspective, COHR trades at a forward 12-month price-to-earnings ratio of 37.19X, higher than Dave and GDS Holdings’ 10.68X and 25.74X, respectively.
Image Source: Zacks Investment Research
Coherent and GDS Holdings have a Value Score of D. Dave carries a Value Score of C.
The Zacks Consensus Estimate for COHR’s earnings for 2026 and 2027 has increased marginally and 1.5%, respectively, over the past 60 days.
Image Source: Zacks Investment Research
COHR currently sports a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Dave Inc. (DAVE): Free Stock Analysis Report
Coherent Corp. (COHR): Free Stock Analysis Report
GDS Holdings (GDS): Free Stock Analysis Report
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
