PLTR vs. COHR: Which AI-Driven Tech Stock Has More Upside Now?

Both Palantir Technologies Inc. PLTR and Coherent Corp. COHR are major players in the AI and data infrastructure space.

Palantir is a leading provider of enterprise-level artificial intelligence software, specializing in data integration, large-scale analytics, machine learning operations, and decision-making platforms. Its core platforms — Palantir Gotham, Foundry and Artificial Intelligence Platform (AIP) — are specifically built to empower organizations in both government and commercial sectors to harness the power of their data through real-time decision intelligence and AI-driven operations.

Coherent is a critical supplier of optical and semiconductor technologies, with increasing relevance in AI hardware infrastructure. Its products include high-speed optical transceivers, lasers, compound semiconductors, and advanced substrates, all of which are essential for the high-bandwidth, low-latency data transmission required in AI-centric applications such as data centers, autonomous systems and edge computing.

The Case for PLTR

Palantir’s AI strategy is comprehensive, combining its proprietary Foundry and Gotham platforms with a solid plan to promote AI adoption across both government and commercial sectors. Its AI Platform (AIP) is the backbone of these capabilities, enabling organizations to process large datasets and derive real-time insights. This is especially valuable in sectors requiring extensive data integration, such as defense, healthcare, finance and intelligence, where operational efficiency and decision-making speed are critical.

In the government sector, Palantir is aligning its AI strategy with U.S. defense priorities. Its work in high-profile initiatives, such as the Department of Defense’s Open DAGIR project, highlights its ability to modernize military operations through AI-driven solutions where data interoperability and real-time decision-making capabilities are imperative. These capabilities solidify Palantir’s position as a key player in the defense sector.

In the commercial space, Palantir's AIP boot camps — providing hands-on experience to over 1,000 companies — have proven instrumental in customer acquisition. Boot camps showcase the platform’s capabilities and demonstrate its adaptability across logistics, manufacturing and supply chain management. Palantir’s core customer base comprises businesses seeking tailored AI/ML services, particularly large government and corporate clients willing to invest heavily in its systems. This has generated solid revenues, registering a 21.3% CAGR from 2020 to 2024.

The Case for COHR

Rising AI workloads are significantly increasing traffic between data centers, necessitating that the telecom industry boost investments in higher-capacity interconnects. This surge is fueling widespread upgrades across optical transport networks, which are essential for efficiently handling the surging data movement driven by AI operations. The exponential growth in AI results in massive data generation and processing, and complex AI models — especially large language models (LLMs) and generative AI systems — are increasingly reliant on ultra-fast, low-latency data transmission infrastructure. As a result, there is mounting pressure on data center operators to upgrade their interconnectivity with cutting-edge technologies.

Consequently, demand for Coherent’s datacom products, particularly high-speed optical transceivers, has seen a substantial upswing due to this AI-driven infrastructure transformation. Coherent's optical transceivers play a critical role in enabling high-bandwidth, low-latency communication between graphics processing units, AI accelerators, and storage systems, components vital to AI model training and inference at scale. In particular, shipments of 800G transceivers have increased meaningfully, driven by strong and growing demand from hyperscalers like Google, Amazon, Microsoft and Meta, all of which are aggressively expanding their AI capabilities. These transceivers enable faster connectivity within data centers, facilitating parallel processing and real-time inference operations across distributed compute clusters.

Furthermore, Coherent's transceivers are not only helping manage current AI workloads but are also paving the way for next-generation data center architectures. Their products are designed to handle the increasing complexity and scale of AI model deployments, making them indispensable for hyperscale customers looking to future-proof their infrastructure. As the AI revolution accelerates, Coherent's role in delivering the optical hardware backbone of AI computing continues to grow in strategic importance, making it a key beneficiary of the global pivot toward intelligent, high-performance digital infrastructure.

How Do Zacks Estimates Compare for PLTR & COHR?

The Zacks Consensus Estimate for Palantir’s current year sales and EPS indicates year-over-year growth of approximately 37% and 44%, respectively. This indicates a solid performance trajectory, with EPS estimates trending upward over the past 30 days, signaling increased optimism from analysts about Palantir’s continued profitability and operational leverage, particularly as demand for its AI-driven platforms accelerates.

In comparison, Coherent’s current year sales are projected to grow about 22.6% year over year, a notable figure though slightly more modest than Palantir’s top-line growth. However, Coherent stands out more prominently on the bottom line, with EPS expected to rise by over 100%, outpacing Palantir’s EPS growth rate by a considerable margin. Like Palantir, EPS estimates for Coherent have also been trending higher over the past 30 days, reflecting growing confidence in its earnings recovery, particularly amid the AI-fueled surge in demand for high-speed optical components and data center infrastructure.

Coherent’s Valuation More Attractive Than Palantir

COHR is currently trading at a forward 12-month P/E ratio of 19.13X, which is well below its 12-month median of 30.45X, indicating a potential undervaluation. In contrast, PLTR holds a much higher forward 12-month P/E ratio of 191.04X, though still below its median of 225.63X. While both stocks are trading at a discount to their historical valuations, Coherent appears far more attractively priced from a valuation standpoint, suggesting greater room for multiple expansion, especially given its accelerating earnings growth tied to AI infrastructure demand.

Coherent Holds More Upside Potential

While both Palantir and Coherent are benefiting from the AI boom, Coherent appears to offer more near-term upside. Its critical role in AI infrastructure, surging demand for high-speed optical components, stronger projected EPS growth, and significantly lower valuation multiple make it a more attractively priced AI play. Palantir’s software leadership is compelling, but Coherent’s combination of strategic relevance, earnings momentum, and undervaluation gives it the edge for investors seeking upside potential.

COHR and PLTR carry a Zacks Rank #3 (Hold) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research