Coherent Now Sees Growth Above 60% and Its First $4 Billion Quarter by Fiscal 2028
Coherent has billions in AI contracts and a rival that is about to be swallowed whole. The harder question is whether the cash it burns building capacity will pay off before the biggest orders arrive.
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Coherent (NYSE:COHR | COHR Price Prediction) closed at $195.09 on November 4, 2026, down 5.98% before it reported fiscal first-quarter results. After the release, the stock traded at $204.79 at 7:59 p.m. ET, up 4.97%.
That close left the shares about 55.7% below their 52-week high of $440.00 and about 17.8% below the October 29 close, with a market value of $38.42 billion. What you need to decide is whether the demand Coherent has under contract justifies the cash it must spend to meet it.
A Clean Beat With a Modest Adjustment Gap
Revenue rose 50% to $2.37 billion, or 56% pro forma. That beat the $2.31 billion consensus and fell inside August guidance of $2.2 billion to $2.4 billion. Non-GAAP EPS of $2.09 beat the $1.97 consensus, and GAAP EPS was $1.90.
Non-GAAP net earnings of $422.0 million exceeded GAAP net earnings of $384.7 million. The main add-backs were $73.2 million of stock compensation and $69.5 million of amortization on acquired intangible assets, plus restructuring and integration costs, and a $121.1 million tax effect partly offset them. Stock pay is a real cost to shareholders, but the gap between the two figures is small.
What a $4 Billion Quarter Demands
Coherent forecasts fiscal 2027 pro forma revenue growth above 60%. Chief executive Jim Anderson said that would be more than double the fiscal 2026 rate. Chief financial officer Sherri Luther said pro forma figures exclude the aerospace and defense business Coherent sold.
Anderson said Coherent is on track for its first $3 billion quarter by the end of fiscal 2027. He also said the company has a clear line of sight to its first $4 billion quarter in fiscal 2028, which ends June 30, 2028. That level is about 69% above first-quarter revenue.
Guidance for the quarter ending December 31, 2026 calls for revenue of $2.55 billion to $2.75 billion and non-GAAP EPS of $2.28 to $2.48. Data center revenue grew 85% year over year.
An Unnamed $20 Billion Contract Pays Later
Coherent signed a new agreement for PhotonLink, its integrated optics platform, with an unnamed major AI company. The deal is worth about $20 billion over five years, but revenue won’t start growing until early calendar 2028.
It follows the March agreement with NVIDIA (NASDAQ:NVDA), which is nonexclusive and includes a $2 billion equity investment. NVIDIA announced a similar partnership with Lumentum (NASDAQ:LITE) the same day, so NVIDIA can move orders from one supplier to the other.
Anderson expects PhotonLink revenue above $100 million in the March quarter, and he described calendar 2027 as basically booked out. The optical layer is one piece of the broader AI data-center expansion, and we examined seven suppliers behind it, from power to cooling to networking, in a free report you can grab here.
Capacity Spending Carries the Risk
Indium phosphide is the chip material in Coherent’s lasers, and the company’s in-house capacity for it doubled year over year and is on track to more than double again by the end of calendar 2027. Capital spending in the first quarter was $776 million, up from $104 million a year earlier, and operating cash flow was-$92.7 million.
Luther expects Coherent to reach a first-quarter gross margin above 45% before the end of calendar 2028. The non-GAAP gross margin in the first quarter was 40.6%. Anderson said supply agreements support the targets, although hitting them depends on a small group of AI buyers.
How Coherent Stacks Up Against Lumentum
The evidence leans toward Coherent. Signed agreements and higher guidance support the long-range targets, and the shares still trade far below their high.
Lumentum closed at $626.75, down 7.85%, for a market value of $56.84 billion, and it slipped 2.11% after hours. Marvell (NASDAQ:MRVL) is buying Lumentum in an all-stock deal at 4.5 Marvell shares per Lumentum share. The deal is expected to close in the first half of 2028, so Lumentum shareholders are becoming Marvell shareholders. That leaves Coherent as one of the few independent optical suppliers and a more direct exposure to the shift from copper to optical links.
You can check this view against two tests: fiscal second-quarter revenue should come in at or above $2.55 billion, and PhotonLink revenue should top $100 million in the March quarter. If Coherent falls short on either one, the path to a $4 billion quarter is slipping.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
