Daniel Romero
Technology Equity Analyst, Semiconductors/Data Centers/Physical AI
Coherent looks cheap next to Lumentum, and that valuation gap is unlikely to last at this scale. Lumentum has the best technology and yields today, but Coherent is a very competent company with stronger current financials. Technology leadership comes and goes in fast-moving industries, and nothing guarantees Lumentum stays ahead in five years, so Coherent offers the better risk/reward. x.com x.comÂ
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
Marvell risks paying a peak-scarcity price for Lumentum if optical supply catches up by 2028-30. The proposed ~$99B deal values Lumentum at roughly 20x guided annualized revenue and 58x estimated after-tax operating income, while Lumentum, Coherent and Chinese suppliers are adding laser capacity. The DSP-and-laser combination has strategic logic, but durable scarcity economics and Nvidia's response remain uncertain. x.comÂ
Co-packaged optics standards could make finished transceiver modules smaller and more interchangeable as chip designers build optical engines inside their packages. That is another reason to avoid Lumentum, Coherent and Applied Optoelectronics and prefer Soitec. Lumentum and Coherent now earn a lot from finished modules, leaving them exposed if the architecture changes. x.comÂ
Tighter Lumentum laser allocations would strengthen Coherent's pricing power if Marvell's rumored acquisition leads it to prioritize Nvidia and its own modules. Other buyers would face tighter supply, and hyperscalers would push harder to second-source lasers from Coherent. x.comÂ
Coherent is a tactical buy because growth and margins should accelerate once its 6-inch production ramps, yield challenges notwithstanding. The quarter disappointed on a slower 2x InP ramp and slow margin progress toward 42%, with Coherent still reliant on Lumentum's lasers. Over the next 4-8 quarters it can catch up in simpler CW lasers, with OCS and CPO the real upside. Lumentum, growing about 90% versus Coherent's 20%, remains the preferred concentrated long-term AI-optics bet. x.comÂ
Coherent and Lumentum are ultra overvalued, so when their monthly top comes in, they should fall about four times faster than they rose. Coherent may have already topped. x.comÂ
Lumentum stands apart from everyone else in its field. x.comÂ
Owning Lumentum's laser fab could secure Marvell's FY28 supply and hedge its DSP franchise as optical links shift to CPO. The rumored deal's strategy makes sense, but short-term pain is likely: at a 30% premium, roughly $17.5B in new debt and the rest in stock, rough math puts EPS dilution near 15%. It turns accretive only if Lumentum outgrows Marvell at today's guided rates for five or six more quarters, which looks achievable while the laser shortage lasts. x.com x.com x.comÂ
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.comÂ
Lumentum's 109% year-on-year growth and sold-out capacity through 2029 make selling its AI optics exposure questionable. Bloomberg reported Marvell is in advanced talks to buy it; the appeal depends on the price, especially when holders of an $80 billion Lumentum would become holders of a $320 billion-plus Marvell growing 37%. x.comÂ
