• Earlier this week, Coherent Corp. reported new silicon carbide epitaxy capabilities supporting up to 10kV power devices on 150mm and 200mm wafers for AI datacenters and industrial electrification applications, extending performance for compact, energy-efficient high-voltage power conversion systems.
• This move deepens Coherent’s reach across datacenter, industrial, automotive, and energy markets, reinforcing its role in wide-bandgap materials that underpin higher-efficiency infrastructure as electrification and AI workloads expand.
• With these silicon carbide advances enhancing high-voltage efficiency in AI datacenters, we’ll now examine how this development reshapes Coherent’s investment narrative.

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Coherent Investment Narrative Recap

To own Coherent, you have to believe that AI datacenters and electrification will keep rewarding its heavy investment in advanced photonics and materials. The new 10kV silicon carbide epitaxy capability strengthens that thesis at the margin by broadening its role in high efficiency power systems, but the key near term catalyst still sits in datacenter optics, while the main risk remains execution on large capital projects and maintaining pricing power in increasingly competitive optical markets.

In that context, the recent multiyear agreement with NVIDIA, including US$2.0 billion of committed support for U.S. optics R&D and manufacturing, looks especially important. It directly reinforces Coherent’s datacenter and communications growth engine, where 800G and 1.6T transceivers and indium phosphide capacity ramps have been driving strong segment revenue, and it complements the silicon carbide news by tightening Coherent’s ties into the broader AI infrastructure stack.

Yet despite the excitement, investors should still pay close attention to the risk that heavy capital spending and rich expectations could...

Coherent's narrative projects $11.4 billion revenue and $1.8 billion earnings by 2029. This requires 22.0% yearly revenue growth and about a $1.6 billion earnings increase from $192.2 million today.

Uncover how Coherent's forecasts yield a $284.25 fair value, a 8% downside to its current price.

Exploring Other Perspectives

The most optimistic analysts were already assuming Coherent could reach about US$9.4 billion in revenue and US$1.4 billion in earnings by 2028, so this silicon carbide step may either reinforce that upbeat view or highlight how sensitive those forecasts are to any stumble in AI optics demand or manufacturing execution.

Explore 8 other fair value estimates on Coherent - why the stock might be worth as much as $287.50!

Reach Your Own Conclusion

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

• A great starting point for your Coherent research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Coherent research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Coherent's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.