erent (US:COHR) ZACKS·2026-01-16 17:46Core Insights - Coherent Corp.'s AI initiatives are driving significant revenue growth, with a 51% year-over-year increase in the data center and communications market for fiscal 2025, and a 61% increase specifically in the data center segment [2] - The company reported a 17.3% year-over-year rise in its top line in the first quarter of fiscal 2026, with datacenter revenues growing by 23%, indicating strong demand for AI solutions [3][9] - Coherent's operating margin expanded by 1,081 basis points year-over-year, suggesting scalability in its operations, which is crucial for growth in the AI market [3] Product Pipeline and Market Opportunities - The swift adoption of the 1.6T transceiver and higher yields from the 6-inch Indium Phosphide (InP) are expected to support further growth in 2026 [4][9] - The Optical Circuit Switch market is valued at over $2 billion, presenting a significant growth opportunity for the company [5][9] - The divestiture of the Aerospace and Defense business allows Coherent to focus on high-margin AI demand, streamlining its product portfolio [5] Market Outlook - The global AI datacenter market is projected to reach $13.6 billion, with a compound annual growth rate (CAGR) of 28.3% through 2030, indicating a favorable environment for Coherent's growth [6] - Coherent's stock has increased by 99.4% over the past year, outperforming the industry average growth of 13.9% [7] Valuation Metrics - Coherent trades at a 12-month forward price-to-earnings ratio of 33.89X, which is a premium compared to GigaCloud Technology's 11.79X but lower than AppLovin's 39.62X [11] - The Zacks Consensus Estimate for Coherent's earnings for fiscal 2026 and 2027 has seen increases of 1.2% and 1.1%, respectively, over the past 60 days [13]