BofA Hikes Coherent Price Target to $400 on $1.7 Trillion AI Data Center Forecast

Bank of America just nudged its target on Coherent (NYSE:COHR | COHR Price Prediction) stock higher, lifting the price target to $400 from $365 while maintaining a Neutral rating. The catalyst: Bank of America raised its calendar 2030 AI data center systems total addressable market to roughly $1.7 trillion from $1.4 trillion, a thematic shift that also drove same-day price target hikes on several AI infrastructure names. For Coherent stock, the message is incremental upside, not a high-conviction call.

The analyst upgrade highlights how central optical components have become to the AI buildout, even as Coherent signals that valuation already reflects much of the bull case.

The Analyst’s Case

Bank of America’s thesis hinges on a bigger AI infrastructure pie. The firm asserted that 2026 will continue to be a year of accelerating AI sales and returns on investment, with 2027 potentially seeing improving tokenomics and efficiency as new compute and memory architectures ramp.

For Coherent specifically, optical components are critical plumbing inside AI data centers. As GPU clusters scale into the hundreds of thousands of accelerators, fiber optic connectivity handles the high-bandwidth, long-reach data movement that copper cannot.

Company Snapshot

Coherent is a diversified photonics and laser supplier (formerly II-VI) serving data center, communications, and industrial markets. The Datacenter & Communications segment generated $1.361 billion in fiscal Q3 2026, up 41% year over year, and now represents 75% of total revenue.

Coherent’s Q3 FY2026 revenue of $1.805 billion grew 21% year over year, with non-GAAP EPS of $1.41. CEO Jim Anderson stated that “As AI datacenter infrastructure continues to scale, we are rapidly expanding capacity to meet demand.” The company has also benefited from NVIDIA’s $2 billion investment supporting U.S. manufacturing.

Why the Move Matters Now

Coherent stock has already run hard, up roughly 118% year to date (YTD). That explains the Neutral stance: Bank of America acknowledges incremental upside without endorsing chase-the-rally conviction.

The valuation is rich. Coherent’s trailing P/E ratio sits at 182x, with a forward P/E ratio of 45x, which may be too high for some value-conscious investors.

What It Means for Your Portfolio

For prudent investors, the Coherent stock’s price target raise validates the AI optical thesis without giving the all-clear. Q4 FY2026 guidance of $1.91 billion to $2.05 billion in revenue and $1.52 to $1.72 in non-GAAP EPS suggests continued momentum, yet the industrial segment’s 16% year-over-year decline and $3.18 billion long-term debt remain real risks.

The coordinated nature of Bank of America’s same-day target hikes across AI infrastructure names signals a thematic call. For long-term portfolios, Coherent stock warrants a closer look, but moderate position sizing makes sense given the run already in the books and a Neutral rating from the firm driving the latest move.