Earnings: Coherent Beats Expectations Amid AI Infrastructure Boom, But Stock Falls Post-Release

Coherent (COHR-US) released better-than-expected financial results after market close on Wednesday (12th), underscoring the increasingly critical role of the optical communications networking company's technology amid the ongoing expansion of artificial intelligence (AI) infrastructure. However, the company's stock price declined after hours, seemingly failing to meet investors' even higher expectations.

As of press time, Coherent's stock was down 2.7% in after-hours trading on Wednesday. Earlier that day, the stock had surged 8.2% to close at $355.64 per share, up nearly 93% year-to-date and over 200% in the past year.

The immediate post-earnings weakness may reflect rising investor profit expectations for optical communications suppliers, particularly after rival Lumentum Holdings (LITE-US) reported strong results on Tuesday, further heating market sentiment.

Q4 (ended June 27) Key Figures vs Analyst Expectations

Revenue: $2.05 billion vs $1.69 billion

EPS: $1.74 vs $1.62

F2027 Q1 Guidance vs Analyst Expectations

Revenue: $2.3 billion vs $2.14 billion

EPS: $1.85–$2.05 vs $1.77

Coherent reported adjusted EPS of $1.74 for the fourth quarter of its fiscal year 2026, above $1.00 in the same period last year, with revenue rising 34% year-over-year to $2.05 billion—both revenue and EPS exceeded market expectations.

The company's largest business segment, 'Data Center and Communications,' generated $1.62 billion in revenue for the fourth quarter, up from $1.02 billion a year earlier. However, the industrial business segment saw a 16% year-over-year revenue decline, and full-year operating cash flow also dropped significantly.

The outlook for the current quarter (first quarter of fiscal year 2027) is strong, with adjusted EPS forecast at $1.85 to $2.05 and midpoint revenue guidance at $2.3 billion.

CEO Jim Anderson stated in a press release: 'As we enter fiscal 2027, customer demand remains very strong, capacity expansion continues, and multiple new growth platforms are beginning to ramp into volume production.' He also noted that data centers are gradually shifting from copper-based connectors to optical interconnect solutions.

NVIDIA (NVDA-US) announced in March this year a $2 billion investment in Coherent to support R&D, manufacturing capacity, and operations.

Coherent's current stock price trades at a forward P/E ratio of 39 times estimated earnings over the next 12 months, up from about 25 times a year ago. Rival Lumentum currently trades at approximately 41 times forward P/E and was down 0.4% in after-hours trading on Wednesday.