Coherent: The Company That Gets Stronger in the CPO Era
Damnang
· Damnang’s Substack
· June 17, 2026 at 07:24
· ⏱ 9 min read
| Read on Substack ↗
Summary
Coherent (COHR) has become a crucial supplier in the AI data center optical transceiver market, with production fully booked through 2028 and a long-term supply agreement with NVIDIA through 2030. The article argues that its revenue is now supply-constrained rather than demand-constrained, justifying its 5x stock price surge and suggesting further upside if it can execute on capacity expansion.
•Coherent's stock rose from $77 to $385 in one year, hitting an all-time high of $440, with market cap near $75B.
•NVIDIA invested $2B directly in Coherent and signed a long-term agreement locking in volume and pricing through 2030.
•2026 production slots are sold out, 2027 nearly fully booked, and customers are placing orders for 2028.
•CEO Jim Anderson (former AMD, Lattice) improved non-GAAP gross margin from ~37% to 40% in two years.
•Eight growth engines: four current (800G/1.6T transceivers, DCI, ZR+, merchant components) and four future (multi-rail, OCS, CPO, thermal cooling).
•Coherent is one of only two companies producing high-quality optical circuit switches (OCS) at volume.
The article details Coherent's exceptional order book visibility (sold out through 2028), long-term agreements with NVIDIA, technical moats in CPO and OCS, and margin improvement under new management,
The article details Coherent's exceptional order book visibility (sold out through 2028), long-term agreements with NVIDIA, technical moats in CPO and OCS, and margin improvement under new management, all supporting a bullish thesis for the company's growth.
Risk: Execution risk in ramping 6-inch InP capacity; dependence on hyperscaler spending cycles; valuation already reflects high expectations.
NVIDIA's $2B direct investment and long-term agreement with Coherent through 2030 highlight its dependency on Coherent's optical transceiver supply for AI data center connectivity. Coherent's capacity
NVIDIA's $2B direct investment and long-term agreement with Coherent through 2030 highlight its dependency on Coherent's optical transceiver supply for AI data center connectivity. Coherent's capacity constraints mean that NVIDIA's ability to scale its GPU clusters is partly tied to Coherent's production ramp.
Risk: If Coherent fails to meet volume commitments, NVIDIA could face supply chain bottlenecks; over-reliance on a single optical supplier.