Core Insights - Coherent Corp. (COHR) is a leader in Silicon Carbide (SiC) substrates for power electronics, which are crucial for enhancing energy efficiency in electric and hybrid-electric vehicles. The demand for EVs is driving the EV battery market, projected to grow at a CAGR of 9.6% from 2024 to 2035, providing opportunities for COHR to expand its market share [1]. Group 1 - Coherent received a $1 billion investment from DENSO and Mitsubishi Electric Corporation to scale SiC power electronics manufacturing on a 200 mm technology platform, strengthening its position in the EV sector [2]. - The company announced the sale of its aerospace and defense business to Advent for $400 million, allowing it to reduce debt and invest in AI and EV R&D [2]. - Despite positive developments, COHR faced a 6% year-over-year decline in its Materials segment revenues in 2025 due to softer automotive and SiC end market demand, indicating a long-term strategy is needed for navigating the EV market [3]. Group 2 - The competitive landscape includes rivals like Cognex and Applied Materials, which focus on automated manufacturing of advanced products, posing a threat to COHR's market share. To remain competitive, COHR is expected to invest in R&D and develop next-gen battery technologies such as Lithium-Sulfur batteries [4]. - Over the past year, COHR stock gained 18.8%, slightly outperforming the Zacks S&P 500 Composite's 18.3% increase, but lagging behind the industry’s 75.4% rally [5]. - COHR trades at a forward price-to-earnings ratio of 18.2X, lower than the industry average of 26.52X, with Applied Materials at 16.6X and Cognex at 43.23X [9]. Group 3 - The Zacks Consensus Estimate for COHR's earnings for fiscal years 2026 and 2027 has increased by 4.1% and 11.2%, respectively, over the past 60 days [11]. - COHR currently holds a Zacks Rank 2 (Buy), indicating positive market sentiment [12].

Group 1 - The semiconductor sector experienced significant declines, with major companies like Micron Technology dropping over 17% [1] - NVIDIA's two-times leveraged ETF fell by 7.4%, indicating a broader market reaction to semiconductor stocks [1] - Other notable declines included Advanced Micro Devices (AMD) down 3.3%, and TSMC ADR down 2.9%, reflecting a negative sentiment across the industry [1] Group 2 - The overall semiconductor ETF decreased by 2.9%, suggesting a bearish trend in the semiconductor market [1] - Companies such as Supermicro and Arm Holdings also faced declines of 4.9% and 3.1% respectively, highlighting widespread weakness [1] - The performance of related companies like Amphenol and Nova also showed declines, with drops of 3.3% and 4.2% respectively [1]

Core Insights - Palantir Technologies Inc. (PLTR) and Coherent Corp. (COHR) are significant players in the AI and data infrastructure sectors [1] Palantir Technologies Inc. (PLTR) - Palantir specializes in enterprise-level AI software, focusing on data integration, large-scale analytics, and decision-making platforms [2] - The company's core platforms, including Palantir Gotham, Foundry, and Artificial Intelligence Platform (AIP), enable organizations to leverage data for real-time decision-making [2] - In Q2 2025, U.S. commercial revenues increased by 93% to $306 million, while U.S. government business rose by 53% to $426 million, indicating strong growth [4] - AIP allows clients to integrate autonomous AI agents into workflows, enhancing decision-making speed and productivity [5] - AIP bootcamps have accelerated client adoption, reducing time-to-value and receiving positive feedback for user-friendliness and scalability [6] - Total U.S. commercial contract value grew by 222% year-over-year in Q2, with remaining deal value increasing by 145% to $2.79 billion [7] - The Zacks Consensus Estimate for PLTR indicates a projected sales growth of approximately 46% and EPS growth of 59% year-over-year [16] Coherent Corp. (COHR) - Coherent reported a 51% revenue increase for fiscal 2025, driven by the demand for AI infrastructure in data centers and communications [8] - The data center segment alone surged by 61%, reflecting the global demand for high-bandwidth optical solutions [8] - Coherent's strategy includes ramping up new products, such as 1.6T transceivers, which are expected to significantly contribute to revenue in fiscal 2026 [9] - The company has expanded its indium phosphide (InP) capacity by 3X year-over-year, enhancing its manufacturing capabilities [10] - Coherent's revenues in communications rose by 42% year-over-year in Q4 fiscal 2025, driven by the adoption of high-speed coherent transceivers [14] - The Zacks Consensus Estimate for COHR indicates a projected sales growth of about 9% year-over-year and EPS growth of 29% [19] Valuation Comparison - COHR is trading at a forward P/E ratio of 18.93X, below its 12-month median of 28.04X, suggesting potential undervaluation [23] - In contrast, PLTR has a much higher forward P/E ratio of 202.65X, although still below its median of 267.56X [23] Investment Outlook - Palantir's rapid revenue growth and expanding U.S. commercial contracts position it favorably for near-term upside in the AI sector [24] - Coherent, while essential for AI hardware infrastructure, exhibits steadier growth that is more dependent on hardware cycles [24]

Group 1 - Coherent (COHR) has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to Amplitude, Inc. (AMPL), which has a Zacks Rank of 4 (Sell) [3] - Value investors utilize various valuation metrics to identify undervalued stocks, including P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] - COHR has a forward P/E ratio of 19.84, significantly lower than AMPL's forward P/E of 171.38, suggesting COHR is more attractively priced [5] Group 2 - COHR's PEG ratio is 0.79, indicating a favorable valuation relative to its expected earnings growth, while AMPL's PEG ratio is 4.43, suggesting it may be overvalued [5] - COHR has a P/B ratio of 2.35, compared to AMPL's P/B of 3.94, further supporting COHR's stronger valuation metrics [6] - COHR's overall Value grade is B, while AMPL's Value grade is F, highlighting COHR as the better option for value investors [6]

Investment Rating - The report maintains a "Positive" investment rating for the communication equipment industry [15]. Core Insights - Major cloud vendors such as Google, Amazon, Microsoft, and Meta reported better-than-expected financial results, driven by strong demand for cloud services and advertising, with significant capital expenditure increases [4][7]. - AI applications are deeply penetrating various sectors, leading to accelerated investments in computing power and infrastructure [7][13]. - The overall trend indicates a robust growth trajectory for AI and computing power, with companies ramping up their capital expenditures to support this growth [13]. Summary by Sections Cloud Vendors: Strong Financial Performance and Demand - Google reported Q2 2025 revenues of $96.43 billion, up 13.8% year-on-year, with a net profit of $28.20 billion, up 19.4% [24][26]. - Amazon achieved Q2 2025 revenues of $167.70 billion, a 13.3% increase year-on-year, with a net profit of $18.16 billion, up 34.7% [34][36]. - Microsoft recorded Q4 FY25 revenues of $76.44 billion, an 18.1% increase year-on-year, with a net profit of $27.23 billion, up 23.6% [43][45]. - Meta's Q2 2025 revenues reached $47.52 billion, a 21.6% increase year-on-year, with a net profit of $18.34 billion, up 36.2% [51][54]. CPU/GPU: Product Iteration and Ecosystem Upgrade - AMD's Q2 2025 revenues were $7.69 billion, a 31.7% increase year-on-year, with a net profit of $0.87 billion, up 229.1% [60][62]. - The client and gaming segments saw record growth, while the data center business faced challenges due to export restrictions [62]. Switches: High-End Volume and Stable Profitability - Arista's revenue growth was driven by its AI Center strategy, with significant increases in AI network revenue [9]. - Celestica's communication market growth was primarily driven by high-performance switches, with revenue and performance outlooks adjusted upwards [9]. Optical Communication & Fiber Optics: Strong Shipments and Scale-Up Acceleration - Lumentum's optical module shipments surged, and coherent optical communication business saw rapid growth [10]. - Corning's optical communication business thrived, driven by enterprise networks, with expectations for significant future growth from scale-up scenarios [10]. Cables: Strong Orders and Active Capacity Expansion - Amphenol reported strong AI-related orders and exceeded expectations in IT data communication business growth [11]. Cooling: High Demand and Accelerated Liquid Cooling Adoption - Vertiv's revenue and profits saw significant growth, with a strong order backlog and upward guidance for the year [12]. Investment Recommendations: Accelerating Business Flywheel and Computing Power - The report recommends several companies across different segments, including optical modules, liquid cooling, fiber optics, and AI applications, highlighting their potential for growth [13].

Core Insights - Coherent Corp. (COHR) is strategically positioned to benefit from the expanding AI and high-performance computing markets, with a notable shift towards AI and datacom yielding positive results [1][2]. Financial Performance - In fiscal 2025, COHR achieved record revenues of $5.8 billion, reflecting a 23% increase year-over-year, driven by a 61% surge in data center revenues [2][8]. - The company experienced a 358-basis-point expansion in non-GAAP gross margin, indicating the high-value nature of its AI-centric products [2]. Product Development - COHR has initiated revenue shipments of its 1.6T transceivers, essential for upcoming high-speed AI interconnects, showcasing the potential of its future product pipeline [3]. - The Optical Circuit Switch platform is also generating revenues, contributing to the company's market position [4]. Market Trends - The demand for data centers is expected to grow significantly, with McKinsey projecting an annual capacity increase of 19-22% from 2023 to 2030, presenting substantial opportunities for COHR [5]. Stock Performance and Valuation - COHR's stock increased by 10.4% over the past three months, slightly underperforming the industry average of 12.3% [6]. - The company trades at a forward price-to-earnings ratio of 18.15X, significantly lower than the industry average of 86.56X, indicating a favorable valuation [10]. Earnings Estimates - The Zacks Consensus Estimate for COHR's earnings has risen by 3.9% and 11.6% for 2025 and 2026, respectively, over the past 60 days [13].

Investment Rating - The report maintains a "Positive" investment rating for the communication equipment industry [7]. Core Insights - Optical Circuit Switching (OCS) technology allows for routing and forwarding of optical signals without optical-electrical conversion, offering ultra-high transmission speeds, low latency, low power consumption, and high stability compared to traditional switches. This technology is expected to significantly enhance the value of the industry chain in the long term [2][10]. - Google has integrated OCS technology into its TPU v4 generation, which is now in large-scale deployment. Major overseas optical communication leaders are actively promoting OCS products, with significant revenue contributions expected by 2026 [2][10]. Summary by Sections OCS Technology Overview - OCS operates on the principle of direct optical signal switching, eliminating the need for optical-electrical conversion, thus providing advantages such as ultra-high transmission speed and low power consumption. It is seen as a potential long-term replacement for electrical switches [10]. - LightCounting predicts that OCS shipments will experience explosive growth, reaching 10,000 units in 2023 and exceeding 50,000 units by 2029 [10]. Competitive Landscape - There are three main approaches to OCS technology: MEMS, Digital Liquid Crystal (DLC), and Direct Laser Beam Steering (DLBS). Google and Lumentum primarily use the MEMS approach, while Coherent employs the non-mechanical DLC method [10]. - The report highlights that Lumentum and Coherent have begun generating revenue from their OCS businesses, with expectations for continued revenue growth in upcoming quarters [4][10]. Market Outlook - The report suggests that OCS technology will replace electrical switches in the spine layer first, with potential penetration into the leaf/ToR layer in the future. The market for OCS is projected to expand significantly, with an estimated market space of around $2 billion [10]. - Key players to watch include optical system manufacturers with first-mover advantages, as well as manufacturers of passive optical components and laser sources [10].

Core Insights - Symbotic (SYM) and Coherent Corp. (COHR) are prominent players in the Zacks Technology Services industry, with SYM focusing on AI-enabled robotics for supply chain operations and COHR on advanced optical and semiconductor technologies [1][2] Group 1: Symbotic (SYM) - SYM has a significant backlog of $22.4 billion, positioning it for substantial revenue generation in the near future [5] - The company reported a 26% year-over-year revenue increase, with expectations of revenues between $590 million and $610 million for the fourth quarter of fiscal 2025 [6] - SYM's partnership with Walmart is crucial, contributing significantly to its revenues, but poses customer concentration risks [8] - Despite revenue growth, SYM has a history of negative earnings surprises, with an average negative surprise of 78.3% over the last four quarters [7] Group 2: Coherent Corp. (COHR) - COHR experienced a 23% revenue increase in fiscal 2025, driven by AI datacenter demand and telecom recovery [9] - The company is advancing its product offerings, including new 1.6T transceivers, which are expected to contribute positively to revenues in fiscal 2026 [10] - COHR has consistently outperformed earnings estimates, with an average beat of 13% over the past four quarters [11] - COHR's valuation is more attractive compared to SYM, trading at a forward price-to-sales multiple of 2.1 versus SYM's 10.33 [14] Group 3: Market Performance and Valuation - Over the past month, SYM shares have declined over 5%, while COHR shares have seen a more significant decline [12] - Concerns regarding COHR's market share in datacom offerings have contributed to its stock performance [12] - COHR's attractive valuation and strong product portfolio make it a more appealing investment compared to SYM [16]

Core Viewpoint - Morgan Stanley has lowered the target price for Coherent (COHR.US) from $97 to $89 while maintaining a "hold" rating, citing disappointing future prospects despite better-than-expected earnings in Q4 [1] Financial Performance - Coherent's Q4 earnings per share exceeded Wall Street expectations, indicating strong short-term performance [1] - The stock had previously risen by 20% in the last month, reflecting market optimism [1] Market Context - The disappointing outlook for Coherent is particularly notable given the positive earnings reports from other AI-related companies that have raised market expectations [1] - Morgan Stanley suggests that Coherent's stock may remain "underappreciated" in the current market environment [1]

Core Insights - Coherent Corp.'s stock price has increased by 13.9% over the past three months, outperforming the industry average of 12% and the Zacks S&P 500 Composite's growth of 9.3% [1][7] - The company reported a significant revenue increase of 51% for fiscal 2025, primarily driven by a 61% surge in the data center market [5][7] - Coherent Corp. is developing new products, including 1.6T and 3.2T transceivers, and has increased its indium phosphide capacity by three times year-over-year to meet rising demand [6][8] Financial Performance - In the year-to-date period, Coherent Corp. experienced a 4.5% decline, contrasting with Microvast's 28% rise and Vimeo's 35.6% decline [4] - The company has a forward P/E ratio of 19.02, which is lower than the industry average of 25.94, and an EV-to-EBITDA ratio of 11.98 compared to the industry's 36.38 [12] - Coherent Corp. has a return on equity (ROE) of 12.2%, significantly higher than the industry's 6%, and a return on invested capital (ROIC) of 6.1%, compared to the industry's -9.1% [15] Market Growth and Future Prospects - The company expects fiscal 2026 revenues to reach $6.7 billion, indicating a year-over-year growth of 9.7%, with further growth of 13.8% anticipated for fiscal 2027 [20] - Analysts have revised EPS estimates upward for both fiscal 2026 and 2027, reflecting confidence in the company's performance [21] - Coherent Corp. has secured a multi-year agreement with Apple for new Vertical-Cavity Surface-Emitting Laser products, expected to contribute to revenue in the second half of 2026 [10] Product Development and Strategic Initiatives - The company began initial revenue shipments of its Optical Circuit Switch (OCS) in fiscal 2025, with the global OCS market projected to grow at a CAGR of 11.6% from 2025 to 2030 [9] - Revenue from communications increased by 42% year-over-year in the fourth quarter of fiscal 2025, driven by demand for high-capacity coherent transceivers [11] - Coherent Corp. is taking significant steps in co-packaged optics-related technologies, which are expected to provide cost and volume advantages [8]