COHR 4Q25: Optical Bottleneck Thesis Intact; Scale-Up Optical TAM Explicitly Confirmed

Following our recent review on LITE, our core view remains that the primary bottleneck in AI infrastructure is gradually shifting from compute toward interconnect bandwidth, with optics increasingly becoming the most direct constraint layer. Coherent’s latest results and management commentary further reinforce this trend. As hyperscaler AI clusters continue to scale, optical components are transitioning from cyclical demand drivers into a more structural infrastructure layer within the AI stack.

Financially, the latest quarter came in solid: revenue reached approximately $1.69B (+~17% YoY) with Non-GAAP EPS of $1.29. FY26Q3 guidance calls for revenue of $1.7–1.84B and gross margin of 38.5–40.5%. The outlook appears steady rather than decisively above expectations, suggesting near-term stock catalysts may be limited. That said, management remains constructive on demand visibility, and the more meaningful earnings inflection likely shifts into the second half of the calendar year, as 1.6T ramps, InP capacity expansion materializes, and CPO programs gradually convert into revenue.