Coherent Rallies 6% Ahead of Earnings as Optical Stocks Rebound; Applied Optoelectronics Gains 5%, Lumentum Ticks Up

Optical networking stocks are bouncing back from a steep slide, and Coherent (NYSE:COHR | COHR Price Prediction) is leading the charge one day before its next earnings report. Coherent stock is at $210.98, up 6% in the morning session. Even after the bounce, Coherent stock is down 37% over the past month.

Fellow transceiver maker Applied Optoelectronics (NASDAQ:AAOI) is joining the rebound. Applied Optoelectronics stock is at $65.68, up 5%. Over the past month, Applied Optoelectronics stock is down 43%.

Lagging the group is Lumentum (NASDAQ:LITE), because a pending acquisition now ties its value to another chipmaker. Lumentum stock is at $689.81, up 0.8%. AI hardware names generally are recovering. The rally comes after a turbulent start to the week, with the midterm elections also drawing attention, and Lumentum is sitting out most of that recovery.

Northland Upgrade Revives the Case for Coherent

Northland upgraded Coherent to Outperform on November 2 with a $280 price target. Northland gave Applied Optoelectronics a matching Outperform upgrade. That came with a $120 target, as the firm argued that the Lumentum takeover highlights the value of scarce photonics capability for AI chip suppliers. That framing turns the deal into a scarcity signal for the independent optical suppliers that remain, Coherent included.

Coherent is expected to post Q1 FY2027 results on November 4 after the close, a date the company hasn’t confirmed. In August, Coherent guided to revenue of $2.2 billion to $2.4 billion and adjusted earnings per share (EPS) of $1.85 to $2.05.

That outlook followed a strong Q4 FY2026, when Coherent’s revenue rose 33.7% year over year to $2.05 billion and its adjusted EPS of $1.74 exceeded the $1.62 consensus. On the company’s August 12 call, CEO Jim Anderson said, “We continue to see no signs of attenuation in customer demand.”

Lumentum Now Trades in Marvell’s Shadow

The all-stock agreement was announced November 2. Marvell Technology (NASDAQ:MRVL) will exchange 4.5 of its shares for each Lumentum share, a package it valued at $1,132 per share at announcement. The fixed ratio ties Lumentum to Marvell’s share price. That means Lumentum stock now follows Marvell more closely than its own results, which helps explain why LITE shares are barely moving alongside its optical peers. Closing isn’t expected until the first half of 2028, so Lumentum could trade as a proxy for a long stretch.

Lumentum’s underlying business is still accelerating. Management guided Q2 FY2027 revenue of $1.575 billion to $1.625 billion, while systems revenue at the company jumped 228.8% year over year last quarter, a pace far ahead of Coherent’s growth.

How Coherent’s Business Model Stands Apart

Coherent runs a vertically integrated stack that starts with compound semiconductor materials and ends with packaged optical modules and subsystems. The company also sells lasers, precision optics and advanced materials to industrial, life sciences and aerospace customers, giving it a revenue stream outside AI data centers. Indium phosphide laser capacity remains Coherent’s main constraint, according to management. “AI runs on compute, but it scales on optical connectivity,” Anderson noted in August.

Applied Optoelectronics designs its own laser chips too, but its business centers on data center transceivers alongside cable TV broadband and telecom products, while Lumentum, by contrast, specializes in lasers, cloud transceiver modules and optical circuit switches, and its roadmap is heading into a larger chip company’s portfolio.

Coherent’s Earnings Report Will Test the Rebound

The next test for Coherent is whether its results land inside the guided range and whether management lifts its outlook for the rest of FY2027. Purchase orders extending into calendar 2028 and long-term agreements running through the end of the decade, as disclosed on the August call, give bulls reason for optimism. Weighing against that, the bears flag $3.2 billion of long-term debt, heavy capital spending, tariff exposure and a soft Industrial segment.

Customers wary of buying lasers from a Marvell-owned Lumentum could steer more orders toward Coherent, so traders may watch for any commentary on that shift. A monthly slide this deep shows how fast sentiment around Coherent can swing in either direction. The optical suppliers supporting the AI data-center expansion sit outside the chipmaker spotlight, and we covered seven of them in a free report here. Some investors may want to wait and see while the debate over Coherent’s order book resolves.

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