Coherent Corp. (COHR): A Bull Case Theory

By Ricardo Pillai | October 22, 2025, 5:59 PM

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 $110.41 as of October 15th. COHR’s trailing P/E was 30.96 according to Yahoo Finance.

Coherent Corp. (COHR) is emerging as a critical player in the AI-driven data center buildout, providing the fiber-optic transceivers and lasers that connect GPUs at hyperscale speed. While the company does not make GPUs itself, its components are essential for AI infrastructure, enabling high-bandwidth data transfer that underpins modern AI workloads.

Coherent’s datacenter and networking segment, already accounting for over 60% of revenue, is the key growth driver, having grown 39% year-over-year in the latest quarter, while industrial lasers and materials, though currently down, are poised for a strong recovery with U.S. manufacturing tailwinds and policy support.

The company serves both short-reach “leaf” data center fabrics and coherent pluggable links between hubs, capturing meaningful market share in each. A typical hyperscale deployment can generate $50–70 million in revenue for Coherent, and scaling to global hyperscale CapEx implies $1.5–2.4 billion in potential revenue from hyperscale data centers by 2027, with additional upside from enterprise and telecom customers. Coherent’s optics roadmap aligns closely with GPU and NIC upgrades, with 800ZR, 1.6T, and 3.2T coherent links enabling hyperscalers to efficiently double bandwidth without costly infrastructure expansion, reinforcing recurring demand.

Looking ahead, Coherent is projecting revenue growth from $6.2 billion in 2025 to $11 billion by 2027, with gross margins expanding to 40% and net margins approaching 20%. This translates into 2027 EPS of roughly $14, implying a P/E under 8× at today’s share price, making it a rare combination of high growth, domestic manufacturing leverage, and undervaluation. With a dual growth engine in hyperscale networking and industrial lasers, plus clear visibility into AI-driven data center buildouts, Coherent presents a compelling risk/reward opportunity for investors seeking exposure behind the AI chip boom.

Previously we covered a bullish thesis on Wolfspeed, Inc. (WOLF) by Moist-Clerk in October 2024, which highlighted the company’s leadership in SiC and GaN technologies, growth in EV and 5G markets, and its Mohawk Valley Fab expansion. The stock has appreciated approximately 100% since our coverage. The thesis still stands as Wolfspeed’s positioning remains strong. Nick Nemeth shares a similar perspective but emphasizes Coherent Corp.’s role in AI-driven data center networking.

Coherent Corp. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 66 hedge fund portfolios held COHR at the end of the second quarter which was 61 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. 

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