As Coherent Locks Down a Bigger Nvidia Deal, Should You Buy, Sell, or Hold COHR Stock?

Coherent Corporation (COHR) is known for making the lasers and optical networking tech that quietly power the world’s most advanced chips and artificial intelligence (AI) data centers. Recently, the company has been in the spotlight.

On Monday, shares jumped by mid-teen percentages after chip heavyweight NVIDIA (NVDA) announced an expanded, multiyear strategic partnership that includes a $2 billion investment in Coherent. The nonexclusive deal also carries a multibillion-dollar purchase commitment and future access and capacity rights for advanced laser and optical networking products.

The collaboration aims to accelerate next-generation silicon photonics and high-bandwidth optical interconnects, which are considered the backbone of tomorrow’s AI factories. While Nvidia brings AI computing muscle, Coherent gains funding to scale R&D, expand U.S. manufacturing, and build capacity to meet rising demand for AI infrastructure. With a 20-year relationship now expanding into multiple product families, Coherent’s role as a critical enabler of AI infrastructure is now hard to ignore.

With momentum building and COHR hitting fresh highs, should investors snag the stock, pause before chasing the rally, or simply lock in their profits now?

About Coherent Stock

Coherent is a global provider of engineered materials, optoelectronic components, and laser systems serving industrial, communications, electronics, and research markets. Headquartered in Saxonburg, Pennsylvania, the company was founded in 1971 and was formerly known as II-VI Incorporated before rebranding in 2022. Its market capitalization currently stands at $56 billion.

Coherent provides the critical technologies that help power modern connectivity, advanced manufacturing, and next-generation innovation worldwide. It operates through its segments of Networking, Materials, and Lasers. Its portfolio ranges from data center transceivers and semiconductor devices to advanced ceramics, laser optics, and high-performance laser systems used in chip manufacturing, display production, and precision engineering.

Shares of the laser and photonics equipment maker had soared 2,747% over the past two decades and up 1,080% over the past 10 years. Narrowing the lens, COHR stock has jumped 676% over the past three years and 311% over the past 52 weeks as the smart money piles into AI infrastructure plays.

In fact, in 2026, COHR is already off to a strong start. It has climbed 52% year-to-date (YTD), tagging a fresh all-time high of $299.09 just yesterday. The latest spark came after Nvidia's announcement of the $2 billion multiyear strategic investment in Coherent. The stock responded with a sharp 15.4% single-day rally.

Technically, the breakout looks supported. Trading volume has surged, signaling strong buyer confidence. The 14-day RSI has moved to 65.20, entering overbought territory – a sign of strength, though it could invite short-term cooling. Meanwhile, the MACD oscillator signals bullishness, with the MACD line above the signal line and a positive histogram, suggesting momentum is still firmly on the upside.

After a strong run over the past year, COHR stock is no longer flying under the radar. It carries a premium price tag, trading at 55.8 times forward adjusted earnings and 8.09 times sale. Both are higher than the sector averages and historical medians.

That kind of premium can make investors worried. But Coherent sits in a fast-growing photonics space, has solid analyst backing, and is expected to deliver double-digit sales and earnings growth ahead. In this case, the valuation reflects belief in sustained momentum.

A Closer Look at Coherent’s Stellar Q2 Report

Coherent released its second quarter of fiscal year 2026 on Feb. 4, generating revenue of $1.69 billion, up 17.5% year-over-year (YOY), powered largely by relentless demand in its data center and communications business. Non-GAAP EPS climbed 35.8% annually to $1.29, and both top and bottom lines cleared Wall Street’s expectations. Margins moved in the right direction, too, with non-GAAP gross margin expanding to 39%.

Data center and communications segment revenue surged 33.5% YOY and now makes up 72% of total sales, up from 63% a year ago. Demand for 800 gig and 1.6T transceivers continues to accelerate as AI infrastructure scales. Coherent has clearly positioned itself at the center of that buildout.

Meanwhile, on a pro forma basis, industrial segment revenue rose 4% sequentially and was flat annually, supported by solid orders from semiconductor capital equipment customers. Industrial lasers and engineered materials kept the floor steady.

Financially, the balance sheet looks stronger. Cash stood at $863.7 million at the end of December 2025, while long-term debt was $3.2 billion. The leverage ratio improved to 1.7x from 2.3x a year ago, representing a meaningful step down. 

On its latest earnings call, management laid out a confident and capacity-focused outlook. They believe the company’s strong product portfolio, vertical integration model, and expanding U.S. manufacturing footprint position it with a clear competitive advantage. Growth is expected to be driven by a mix of 1.6T and 800G transceivers, along with Optical Circuit Switch systems, as transceiver demand continues to accelerate meaningfully.

To meet that demand, Coherent is moving quickly to expand production capacity. It is actively scaling its Indium Phosphide platform, supported by the ramp-up of 6-inch wafer production in Sherman, Texas, and Järfälla, Sweden. The company also completed the sale of its Munich-based materials processing tools division at the end of January 2026. The Q3 guidance includes $5 million of revenue related to operations prior to the sale.

A resilient growth is anticipated through the second half of fiscal 2026 and into fiscal 2027, supported by data center demand, capacity expansion, and improving industrial trends. While revenue for Q3 is expected to be between $1.70 billion and $1.84 billion, management anticipates non-GAAP gross margin to land somewhere between 38.5% and 40.5%, with non-GAAP EPS expected between $1.28 and $1.48.

Analysts tracking Coherent expect its Q3 revenue to be around $1.78 billion, with non-GAAP EPS of $1.39. For fiscal 2026, EPS is projected to rise about 73.1% YOY to $4.64, before growing by another 39.9% annually to $6.49 in fiscal 2027.

What Do Analysts Expect for Coherent Stock?

Analysts monitoring COHR are bullish, with consensus leaning heavily toward a “Strong Buy,” an upgrade from a “Moderate Buy’ rating a month back. Out of 20 analysts, 14 recommend a “Strong Buy,” one suggests a “Moderate Buy,” and the remaining five are playing it safe with a “Hold” rating.

The stock is soaring, and it currently trades at a premium to its average price target of $245.06. Meanwhile, the Street-high target of $345 suggests COHR stock could rise 22.86% from the current price levels.

Final Thoughts on COHR

The AI boom is today’s reality, reshaping how computing works. AI factories are generating massive volumes of data with every prompt, every interaction, every token. That shift demands ultrahigh bandwidth, energy-efficient connectivity, and optical interconnects with advanced package integration, which are becoming crucial to this next phase of infrastructure.

Coherent's expertise in optical innovation and advanced manufacturing pairs directly with NVIDIA’s leadership in AI computing and networking. The expanded partnership reinforces Coherent’s role in powering next-generation AI data centers and gives it stronger visibility as demand scales globally.

At the same time, Coherent’s solid balance sheet, widening margins, and steady industrial recovery add financial stability to the growth story. When combining structural AI tailwinds with operational discipline, Coherent stands out as a company positioned not only to participate in the AI era but also to benefit meaningfully from it.