Coherent Corp. (COHR): A Bull Case Theory

We came across a bullish thesis on Coherent Corp. on Mispriced Assets’s Substack by Nick Nemeth. In this article, we will summarize the bulls’ thesis on COHR. Coherent Corp.'s share was trading at $103.49 as of September 10th. COHR’s trailing P/E were 30.96 according to Yahoo Finance.

Coherent (NYSE: COHR) is emerging as a compelling long-term investment, posting quarterly revenue of approximately $1.5 billion, up 24% year-over-year, and holding a market cap near $17 billion. The company’s broad laser and photonics portfolio spans applications from high-speed fiber-optic networks to advanced industrial manufacturing, offering products across all price points—from small optical transceivers sold in volume to large industrial laser systems.

This diversity positions Coherent uniquely, with limited direct competition; Broadcom is one of the few peers at scale in optical networking, TRUMPF Group competes at the high end of industrial lasers, and Lumentum operates in optical components and lasers. Coherent’s vertical integration, home-grown technology, and scale create a defensible moat in a growing market. The company also benefits from domestic tailwinds, as U.S. policy and industrial initiatives support local tech manufacturing, highlighted by Apple naming Coherent a strategic partner in its $600 billion U.S. investment plan for 2025.

Leadership under CEO Jim Anderson, appointed mid-2024, further strengthens the investment case; his track record at Lattice Semiconductor demonstrates a beat-and-raise execution style, focusing on profitable growth, operational streamlining, and disciplined pricing strategies to improve margins. Coherent is also a key beneficiary of the AI and cloud computing boom, with data-center interconnect sales up ~60% recently, driven by AI workloads.

The company’s innovation in high-speed optical transceivers, including next-generation 1.6 Tb/s units for 2025, directly addresses the critical bottlenecks in data transmission, ensuring its technology remains central to expanding data rates. With growth, scale, and innovation aligned, Coherent offers a rare combination of market leadership, technological advantage, and long-term upside potential.

Previously we covered a bullish thesis on Wolfspeed, Inc. (WOLF) by Moist-Clerk in October 2024, which highlighted the company’s leadership in silicon carbide (SiC) and gallium nitride (GaN) technologies, production expansion, and strategic positioning in EV and renewable energy markets. The stock has depreciated approximately 90% since coverage. The thesis still stands as Wolfspeed scales production, while Nick Nemeth shares a similar but emphasizes Coherent’s photonics breadth, domestic tailwinds, and AI-driven optical demand.

Coherent Corp. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held COHR at the end of the first quarter which was 71 in the previous quarter. While we acknowledge the potential of COHR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.