Shares of Coherent (NYSE:COHR | COHR Price Prediction) are down 11.63% in Monday trading, sliding from $379.13 to $335.05. The drop follows a torrid run in which COHR gained 44.22% over the past week and 105.41% year to date.
The talk of the financial world this weekend was whether optics would soon replace memory as the ‘hot’ AI trade, but the reverse is happening today. Let’s dig into the news.
Profit-Taking Ahead of Earnings
There is no confirmed single catalyst behind the pullback. No new company release, analyst action, or macro headline has been tied to the move. What the data does support is that today’s decline looks like positioning rather than a reaction to bad news.
Coherent is scheduled to report Q4 FY2026 results on August 12 after the close, a date confirmed by the company. Options positioning had been telegraphing an outsized move. The full-chain put/call ratio sits at 1.22, and the August 14 expiration ratio is 1.33, with put open interest of 7,972 exceeding call open interest of 6,227 in that post-earnings window. Traders were paying up for downside protection.
The setup is important because COHR has a history of sharp earnings-day reactions. The last miss, in Q4 FY2025, produced a 19.61% day-of decline. That memory, layered on a stock that has run 233.1% over the past year, is a textbook recipe for pre-print de-risking. Fundamentals into the report remain strong: last quarter delivered non-GAAP EPS of $1.41 on revenue of $1.805 billion, up 20.5% year over year, with the Datacenter & Communications segment climbing 40.6% to $1.361 billion, or 75% of total revenue. Management guided Q4 revenue to $1.91 billion to $2.05 billion.
Optical Stocks Drop on Monday
The biggest debate on X and other social media this weekend was whether optics would soon replace memory as the ‘hot’ AI trade. Popular account @jukan05, who is an analyst for Citrini, posted that the market looked poise to sell memory and go long optical. Here’s what he had to say:
“I think the market ultimately has no choice but to go sell memory, long optical in the “short term.” Actually, some hedge funds already seem to have this position on. There are three main reasons. 1. With Korean leveraged ETFs effectively dead, LPs are in a redemption rush, which could bring out additional sell on flow. 2. Nvidia is nerfing Rubin Ultra’s HBM and responding with optics, tying multiple racks together, so that even if Rubin Ultra’s per rack performance is not superior to Rubin, at the cluster level optics let the Rubin Ultra cluster hold an edge over the Rubin cluster. This holds even if Rubin Ultra’s HBM nerf is a supply problem rather than a demand problem. 3. Consensus is forming that memory prices will peak within the next two quarters. Medium to long term I am still a memory bull, but short term I am somewhat bearish on memory. I currently have no memory position.”
At the beginning of the trading day, many optics stocks opened sharply positive while memory stocks were depressed. However, within 10 minutes of the opening bell, the situation had largely reversed. Micron (Nasdaq: MU) stock is marginally positive on the day while most optics names have sold off.
| Ticker | Most Recent Session |
|---|---|
| COHR (Coherent) | -11.63% |
| Lumentum (NASDAQ:LITE) | -7.35% |
| Applied Optoelectronics (NASDAQ:AAOI) | -1.45% |
| Corning (NYSE: GLW) | -2.85% |
It’s important to remember that many of these stocks rallied last week on news the Trump Administration was considering banning optical transceiver sales. Today’s sell-off largely removes a part of last week’s move rather than leaving optics companies trading at fresh lows.
Lumentum, the closest AI-optics comparable, gained 24.68% over the past week and is up 141.51% year to date, with sell-side analysts carrying an average $1,125.93 target. AAOI’s 289.07% YTD gain underscores just how much AI-datacenter optical demand has been priced in across the group. That is exactly the setup that invites pre-earnings profit-taking in the leader.
What to Watch
The next real information point is Wednesday’s after-close Q4 FY2026 earnings report. Keep an eye on the stock relative to the guided revenue range of $1.91 billion to $2.05 billion and the sell-side average target of $394.62. With options positioning already braced for a large move, the earnings report sets the next leg.
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