Coherent Surges 13% as Investors Revisit $20 Billion AI Deal After Sell-Off; Lumentum Climbs 4%, Applied Optoelectronics Gains 3%
Coherent beat estimates, then got hammered anyway. Now a rival's stock-swap merger has left it as the last independent laser maker standing, and traders are asking whether that independence is worth the price of its cash burn.
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AI optical stocks are rallying, and one laser maker is far ahead of the group as traders take a second look at a quarterly report they’d sold off hard. Coherent (NYSE:COHR | COHR Price Prediction) stock trades at $192.14, up 13% on the session. That gain still leaves Coherent stock down 43% over the past month.
Results for Coherent’s Q1 FY2027, released November 4, beat estimates on both revenue and adjusted earnings per share (EPS). Heavy capacity spending still overshadowed the beat, and the stock fell sharply in Thursday’s session. For context, Coherent’s 52-week high is $440.
Why Coherent Is Bouncing Harder Than Its Optical Peers
Revenue at Coherent reached $2.37 billion in Q1, topping consensus, and adjusted EPS of $2.09 beat the $1.97 consensus estimate. Datacenter revenue at Coherent jumped 85% year over year. Most important, Coherent announced a PhotonLink long-term agreement with a major AI company worth about $20 billion over five years, with revenue set to increase in early calendar 2028. PhotonLink is the company’s integrated optics platform for co-packaged optics, near-packaged optics and chip-to-chip links.
Coherent’s Q2 FY2027 revenue guidance of $2.55 billion to $2.75 billion topped consensus, and the company expects fiscal 2027 pro forma revenue growth above 60%. CEO Jim Anderson stated on the call, “We continue to see no signs of attenuation in demand.”
Lumentum (NASDAQ:LITE) has agreed to an all-stock acquisition. Marvell Technology (NASDAQ:MRVL), a chip designer, is the buyer, leaving Coherent as the largest laser maker without a chip designer attached. In Anderson’s words, “Optics and photonics is becoming an absolutely critical part of data center architecture.”
A strong October jobs report, with 165,000 jobs added, and a broader chip rebound are also supporting AI hardware names. Some of Coherent’s jump may reflect a technical bounce after a steep slide, along with a forward earnings multiple that now sits below Lumentum’s.
What Lumentum and Applied Optoelectronics Say About Coherent
Lumentum stock is at $531.42, up 4%. That gain follows a 19% drop in Thursday’s session. Because Marvell is paying in stock, the deal’s implied value has fallen far below the $1,132 per share originally promised to Lumentum shareholders, and the stock trades at a discount even to that reduced value. Analysts expect a Chinese antitrust review of the merger could take 12 to 18 months.
Applied Optoelectronics (NASDAQ:AAOI) stock is at $48.43, up 3%. Q3 2026 results from the company, released November 5, crowned estimates with adjusted EPS of $0.17 against a $0.14 consensus forecast and revenue of $269.9 million. Guidance from Applied Optoelectronics was the sticking point, since its Q4 2026 revenue midpoint of $402.5 million fell short of consensus. Management also stated that the 2027 U.S. capacity expansion will take longer because of electrical power and construction delays.
How Coherent’s Photonics Model Differs From Its Peers
Coherent sells across the photonics chain, from indium phosphide lasers and datacenter transceivers to optical circuit switches and data center interconnect gear, and it keeps an Industrial segment serving semiconductor equipment makers. Lumentum is more concentrated in lasers, transceiver components and optical switches for cloud and AI datacenters, and it’s headed into a chip company’s portfolio. Smaller still, Applied Optoelectronics makes transceivers, also sells cable TV equipment and leans on a handful of hyperscale customers.
That independence is central to Coherent’s pitch. Anderson stated that the company can support multiple hyperscaler and semiconductor customers without competitive conflict.
What Coherent’s Rebound Needs Next
The next test for Coherent is whether PhotonLink revenue reaches $100 million in the March 2027 quarter, as the company expects. Regulatory progress on the Marvell deal remains the key variable for Lumentum, while Applied Optoelectronics needs its U.S. capacity timeline to hold.
The bulls can point to an independent supplier with exceptional order coverage through calendar 2027 and a forward earnings multiple below Lumentum’s. On the bearish side, Coherent’s adjusted operating margin of 23.2% trails Lumentum’s guided 45% to 46%, the company has $1.56 billion in net debt, and its free cash flow was negative $868.2 million last quarter. Traders may prefer to keep their share exposure smaller as they wait to see how Coherent’s PhotonLink revenue ramps up.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
