A Look At Coherent (COHR) Valuation As NVIDIA Investment And AI Demand Reshape Growth And Supply Chain Risks - simplywall.st

Coherent (COHR) has regained market attention due to strong AI data center demand, upbeat financial guidance, and a $2 billion investment from NVIDIA, although new supply chain risks related to critic... Read original →

NVIDIA’s $2B stake in Coherent isn’t just financial—it’s a strategic lock on the AI optical stack. As data centers push from 800G to 1.6T, indium phosphide and silicon photonics have become critical chokepoints. Without securing upstream capacity by 2027, Coherent’s laser and transceiver output will hinge on Corning or suppliers in Taiwan, China. U.S. CHIPS Act mandates are inflating compliance costs, forcing rapid shifts to Mexico and Southeast Asia—pressuring near-term margins. Competitors like Vishay may undercut with cost-optimized silicon photonics in mid-tier segments, while SpaceX’s LEO ambitions create an unexpected demand vector. Over the next 18 months, valuation hinges not on AI capex but on material self-sufficiency and yield ramp speed. Current pricing already assumes flawless execution; any delay in 1.6T standardization could trigger sharp downside.