Coherent Scales New Heights as AI Infrastructure Demand Fuels Record Revenue and Capacity Buildout

Coherent doubles indium phosphide wafer production, reports 21% revenue growth to $1.81B, stock hits 52-week high as AI data center orders extend into 2028.

The laser and optics specialist Coherent has intensified its push into the artificial intelligence supply chain, announcing plans to double indium phosphide wafer production by the end of 2026 — with another doubling targeted a year later. The aggressive capacity expansion comes as the company’s order backlog stretches into 2028, providing rare visibility in a notoriously cyclical market.

Revenue for the March quarter rose 21% to $1.81 billion, matching analyst estimates exactly. Adjusted earnings per share came in at $1.41. Chief Financial Officer Sherri Luther said the company is deploying capital “purposefully” to keep pace with demand from data-centre operators hungry for faster optical components.

The shares leapt nearly 14% on Monday to €324, a fresh 52-week high. Over the past twelve months, the stock has surged more than 305%, reflecting the market’s growing conviction that Coherent will play a central role in the buildout of AI networks. The relative strength index currently sits at 60.1, suggesting there is still room for further gains despite the run-up, while 30-day volatility has spiked to 73%.

Nvidia, the dominant player in AI chips, injected $2 billion into Coherent last year and signed a supply contract that runs through the end of the decade. That tie-up has cemented Coherent’s position as a key supplier of photonic components — especially indium phosphide lasers and transceivers — for the high-bandwidth links that shuttle data between GPUs.

Beyond the Nvidia relationship, Coherent is also betting on co-packaged optics, a technology that integrates optical connections directly with silicon. The company expects this to become crucial for the next wave of AI data centres. Meanwhile, it is expanding production of 800G and 1.6T transceivers for both data-centre interconnects and traditional telecom networks. On the materials side, Coherent is also scaling up silicon carbide epitaxy for high-voltage applications in industrial and data-centre settings.

For the current quarter, management has guided for revenue in a range of $1.91 billion to $2.05 billion, with adjusted earnings per share reaching up to $1.72. The upbeat forecast reflects continued momentum in the communications segment and further margin improvement as new capacity comes online.

The stock’s valuation already bakes in a hefty premium — the share price sits about 80% above its 200-day moving average. Yet with a visible order pipeline and a strategic partner like Nvidia backing its growth, Coherent appears to be betting that the AI buildout is only just beginning. The key test in coming quarters will be whether the company can convert its capacity investments into sustained revenue acceleration without margin erosion.