Key Takeaways
- Shares of Coherent skyrocketed 17.6% on June 2 following remarks by Nvidia CEO Jensen Huang emphasizing optical networking’s critical role in AI data center evolution.
- COHR reached a fresh 52-week peak of $440 on June 3, marking a remarkable 108% gain year-to-date through 2026.
- Third-quarter fiscal 2026 revenue totaled $1.81 billion, representing 21% year-over-year growth and surpassing analyst expectations of $1.78 billion.
- Adjusted earnings per share climbed 55% year-over-year to $1.41, with the Data Center and Communications division posting over 40% YoY expansion to $1.36 billion.
- A transformative $2 billion equity injection from Nvidia, coupled with a long-term supply contract, solidifies Coherent’s position in next-generation AI infrastructure.
Shares of Coherent (COHR) experienced a dramatic rally on June 2 after Nvidia CEO Jensen Huang delivered remarks emphasizing the strategic importance of optical networking technology in powering advanced AI data centers. Though Huang’s commentary specifically mentioned Marvell, the broader optical networking sector benefited significantly — with Coherent emerging as one of the session’s top performers.
COHR shares rocketed 17.6% during that trading session and subsequently touched a 52-week high of $440 on June 3. Year-to-date performance stands at an impressive 108.11%, dramatically outpacing the S&P 500’s 10.11% advance during the identical timeframe.
Looking at the trailing twelve-month period, Coherent has delivered a staggering 370.55% return. This performance significantly eclipses the broader market’s 26.24% gain over the same duration.
Currently, COHR trades approximately 10.6% beneath its recent 52-week peak.
Third Quarter Demonstrates Robust Revenue Acceleration
Coherent unveiled its fiscal third quarter 2026 financial results on May 6, exceeding Wall Street projections on both top and bottom lines. Total revenue reached $1.81 billion, reflecting 21% year-over-year expansion and beating the consensus forecast of $1.78 billion. Adjusted earnings per share registered at $1.41, up 55% from the prior-year period and slightly ahead of the $1.39 analyst estimate.
The Data Center and Communications business unit powered the quarter’s performance, contributing $1.36 billion in revenue — representing growth exceeding 40% year-over-year — and comprising approximately 75% of consolidated sales.
Robust customer demand for 800G and 1.6T transceiver products fueled impressive sequential momentum within the data center vertical. Revenue in this segment advanced 13% quarter-over-quarter and 37% year-over-year. The communications business similarly delivered, posting gains of 16% sequentially and 60% year-over-year.
On a GAAP basis, net income totaled $0.97 per share, a significant turnaround from the $0.11 per share loss recorded in the comparable year-ago quarter. Non-GAAP gross margin expanded to 39.6%.
Strategic Nvidia Alliance and Production Scale-Up
Throughout the quarter, Coherent unveiled a comprehensive strategic collaboration with Nvidia centered on advanced optical networking solutions and co-packaged optics (CPO) technologies for AI-driven data centers. [[LINK_START_3]]Nvidia[[LINK_END_3]] committed $2 billion in equity capital to Coherent while executing a multi-year supply arrangement extending through decade’s end.
The company concluded Q3 with $3 billion in cash reserves, up substantially from $1.5 billion in the previous quarter, primarily reflecting the Nvidia capital infusion. Coherent also strengthened its balance sheet by reducing its debt leverage ratio from 1.7 to 0.5 following a $162 million debt paydown.
On the production front, Coherent announced it anticipates doubling its in-house indium phosphide manufacturing capacity by year-end 2026 — one quarter earlier than originally projected — with plans to more than double capacity again by the conclusion of 2027.
Executives elevated their assessment of the optical circuit switching (OCS) market potential to exceed $4 billion and indicated that initial co-packaged optics revenue generation should commence during the second half of 2026.
For the fourth quarter of fiscal 2026, Coherent provided guidance calling for revenue between $1.91 billion and $2.05 billion, with non-GAAP EPS projected at $1.52 to $1.72 and non-GAAP gross margins ranging from 39% to 41%.
Order bookings reached unprecedented levels in Q3, with management noting that the backlog now stretches into 2028, supported by long-term contractual commitments running through the end of the decade.
Wall Street maintains a consensus “Strong Buy” rating on the shares. Among 22 analysts tracking COHR, 15 assign it a Strong Buy rating, one recommends Moderate Buy, and six suggest Hold. The highest price target on the Street reaches $461.96.
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