Coherent’s AI-Driven Surge Captivates Analysts

Coherent US19247G1076

A wave of analyst optimism is building around Coherent, fueled by quarterly results that smashed expectations and underscored the company's pivotal role in building artificial intelligence infrastructure. The financial performance has triggered a series of bullish price target increases, reflecting strong conviction in the company's growth trajectory.

The company's recent earnings report for the first quarter of fiscal year 2026, ending September 30, 2025, delivered a powerful "beat-and-raise" narrative that has become a cornerstone of the bullish thesis.

Key financial highlights from the quarter include:
* Revenue climbed 17 percent year-over-year to $1.58 billion.
* GAAP net income reached $226 million, marking a decisive swing from a loss in the prior-year period.
* On a per-share basis, GAAP earnings came in at $1.19, dramatically surpassing analyst consensus estimates of approximately $0.26.
* The company's gross margin expanded by 249 basis points to 36.6 percent.

This return to solid profitability signals that Coherent's strategic restructuring efforts, which included the divestiture of its aerospace and defense business unit, are yielding tangible results.

The AI Infrastructure Engine

Central to the upbeat sentiment is Coherent's exposure to booming demand for AI data center infrastructure. Revenue from its AI data center business surged 23 percent compared to the same quarter last year. This growth is being driven by the rollout of high-performance 800G and 1.6T optical transceivers, critical components for data transfer within advanced AI computing clusters. The company reports exponential growth in its order book for these products.

Further strengthening its strategic positioning, Coherent announced a key milestone for its 300-millimeter silicon carbide platform. This technology addresses the escalating need for superior thermal efficiency in power-dense AI data centers.

Wall Street Responds with Higher Targets

The robust fundamentals have prompted a reassessment on Wall Street. JPMorgan recently increased its price target for Coherent shares from $180 to $215, reiterating its "Overweight" rating. The firm's analysts identified Coherent as a primary beneficiary of the AI data center infrastructure build-out, citing opportunities for scale and a sustainably strong demand outlook in optical networking.

This view is echoed across the market, with a cluster of other price target revisions pushing the general range to between $210 and $220.

From a technical perspective, the equity trades near its 52-week high and above its key moving averages, indicating a sustained positive trend. Market participants will now watch closely to see if the company can maintain this growth momentum in its core segments when it reports its next quarterly results.