Coherent’s second quarter results for 2026 surpassed Wall Street’s revenue and profit expectations, yet the market responded negatively. Management identified exceptional demand in the data center and communications segments, with CEO James Anderson attributing the growth to a surge in AI-driven optical networking and ongoing production capacity expansion, particularly in their 6-inch Indium Phosphide lines. CFO Sherri Luther emphasized improved cost structure and greater operating leverage as additional contributors. Despite these achievements, cautious commentary around supply constraints and industry uncertainties shaped investor sentiment.
Is now the time to buy COHR? Find out in our full research report (it’s free for active Edge members).
Coherent (COHR) Q2 CY2026 Highlights:
- Revenue: $2.05 billion vs analyst estimates of $1.99 billion (33.7% year-on-year growth, 2.9% beat)
- Adjusted EPS: $1.74 vs analyst estimates of $1.62 (7.6% beat)
- Adjusted Operating Income: $445.8 million vs analyst estimates of $426.5 million (21.8% margin, 4.5% beat)
- Revenue Guidance for Q3 CY2026 is $2.3 billion at the midpoint, above analyst estimates of $2.14 billion
- Adjusted EPS guidance for Q3 CY2026 is $1.95 at the midpoint, above analyst estimates of $1.77
- Operating Margin: 12.4%, up from 0.4% in the same quarter last year
- Market Capitalization: $60.01 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Coherent’s Q2 Earnings Call
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Samik Chatterjee (JPMorgan) asked how the 6-inch Indium Phosphide ramp translates into revenue and margins. CEO James Anderson explained that output increased 80% year-over-year, directly supporting transceiver revenue, and yields are improving, which should benefit gross margin as production scales.
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Simon Leopold (Raymond James) inquired about potential import restrictions for optical transceivers and the company’s U.S. manufacturing. Anderson stated that Coherent’s large U.S. footprint is a strategic advantage, with over 20 production facilities domestically, and the company is prepared to increase U.S. output if needed.
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George Notter (Wolfe Research) asked about the mix of internally produced versus externally sourced datacom lasers. Anderson replied that internal production is absorbing all current demand and that external sourcing will remain a component for strategic reasons, but internal share will grow as capacity expands.
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Ryan Koontz (Needham & Company) questioned supply constraints and where future investment is most needed. Anderson identified Indium Phosphide production as the primary bottleneck and said that expanded internal manufacturing is critical to removing these constraints.
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Blayne Curtis (Jefferies) sought clarity on the addressable market for Optical Circuit Switching and new integrated optics opportunities. Anderson noted the market outlook for OCS has doubled and that both CPO and NPO projects are seeing active customer engagement, representing incremental growth.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will be watching (1) the pace of Indium Phosphide capacity expansion and its effect on transceiver shipments, (2) the rollout and customer adoption of the PhotonLink integrated optics platform, and (3) the scaling of Optical Circuit Switching and multi-rail systems as new revenue streams. Progress in industrial diversification and execution against long-term customer agreements will also serve as key indicators of sustainable growth.
Coherent currently trades at $301.75, down from $355.64 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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