Damnang
Semiconductor Engineer in Silicon Valley, AI Chip Investment Research
Coherent gets stronger in the co-packaged optics era because its revenue is now set by supply, not demand. Its 2026 production is sold out, 2027 is nearly fully booked and customers are ordering for 2028, while a long-term NVIDIA agreement locks in volume and pricing through 2030. The question narrows to whether it builds what it promises. Its 6-inch InP transition, light-source reliability that matters more in CPO, and deeper vertical integration than Lumentum are underappreciated. x.com x.com x.com x.com
Coherent's 6-inch substrate access, yields and margin concerns look mostly like timing issues in the optical buildout. Coherent is now one of the preferred ways to gain exposure and should participate meaningfully, despite those constraints. x.com
Indium phosphide laser capacity, not demand, now caps how fast 1.6T optics ship, and Coherent owns its laser fabs and grows its own substrate. That makes the InP squeeze Goldman flags through 2027 work in its favor. Record Q4 revenue of $2.05 billion rose 34% as six-inch InP wafers ramped, with 40.2% non-GAAP gross margin and 42%+ guided, at a 0.92 PEG. The risk: with about $3.55 billion of debt and cash burn, it can't absorb a 1.6T ramp slip; six-inch yield at volume is the test. x.com
Applied Optoelectronics has a better chance than Coherent of delivering a 300-400 mW laser with tolerable RIN and linewidth. Its transceiver capacity ramp is also larger and is not gated by Sumitomo's 6-inch InP wafers. Long AAOI against short COHR is an unnecessarily dangerous pair trade idea. x.com
Coherent now has credible exposure to almost every optical architecture hyperscalers are exploring, and its Nvidia deal materially de-risks that roadmap. Nvidia's nonexclusive pact adds a multibillion-dollar purchase commitment, a $2B equity investment and access to five CPO product families. First CPO/NPO revenue targeted for H2 2026 matches Nvidia's timing. Data center and communications are already 72% of revenue. Qualification, standards, concentration and margins remain unsettled. x.com
Coherent's booked InP laser capacity gives it a potential path into Nvidia's CPO expansion. Nvidia wants optical-engine capacity up 15x by mid-2027 and holds laser purchase commitments and capacity rights from its $2B Coherent investment. Coherent says fiscal 2027 is essentially booked and customers are reserving into 2028, but most near-term orders are for pluggables and other products; scale-up CPO revenue starts only in H2 2027. Neither company has sized Nvidia's rights. x.com
VCSEL scale-up optics may spread revenue across more suppliers because they lack the fundamental bottlenecks of InP lasers. Coherent looks well positioned, but the VCSEL opportunity may still be shared more widely; Lumentum is also betting on VCSELs for scale-up. x.com
Coherent should benefit as the shift from copper to light inside AI data centers accelerates, with co-packaged optics now in production and near-packaged optics pulling revenue forward. Nvidia's Spectrum-X Photonics switch is in full production, and TrendForce says CPO has entered mass production. Coherent CEO Jim Anderson says CPO and NPO engagement jumped in the past three to six months, nearly every large customer has a project, and its content per socket is similar in either design. x.com
AI bandwidth demand still favors Coherent and Lumentum, but tight customer financing can delay orders and lasting valuations need durable profits. A model provider losing share need not reduce total bandwidth use. Coherent could beat and raise guidance; Lumentum may only meet estimates this quarter, improving next quarter. If margins partly reflect scarce indium phosphide, added supply will test whether upgrades, volume and cost gains sustain earnings. These earnings calls remain forecasts. … Show more
Applied Optoelectronics, Lumentum and Coherent face share losses at US hyperscalers to Innolight. Channel checks favor Innolight gaining share in Q2 2026, at the expense of those three. Per @poezhao0605, a $7B Hong Kong IPO, the largest in years and upsized from $5B on strong demand, has cleared its listing hearing. x.com
Coherent is becoming the gatekeeper of AI photonics as networking hardware grows as critical and scarce as GPUs. It is the only player to move to 6-inch InP wafers, more than doubling chips per wafer and giving it a cost edge over rivals that buy laser chips, with EML and CW laser capacity set to double in 2026 and again in 2027. Its liquid-cooled XPO optics cut TCO by 20-30%, and its briefing raised its 2030 addressable market to $70B+, including $15B+ for CPO/NPO. x.com