Stifel raises Coherent's (COHR.US) target price to $275: 6.4T CPO technology shines at OFC 2026.

At the 2026 Optical Fiber Communication Conference and Exhibition (OFC) held in San Diego, Coherent, a leading optoelectronics company, once again captured the attention of the capital market with its groundbreaking showcase in the AI data center infrastructure field. Driven by both the positive technological developments and optimistic expectations from investment banks, Coherent's stock price rose nearly 5% on Wednesday, closing at $257.21. Renowned investment bank Stifel, in its latest research report released after the conference, reiterated its bullish stance on the company, significantly raising its target price from $235 to $275 and maintaining a "buy" rating, reflecting the market's high recognition of its core position in the next generation of AI computing networks. At this industry summit, Coherent showcased several key technologies aimed at addressing AI cluster energy consumption and bandwidth bottlenecks, including the highly anticipated 6.4T Slot-Integrated Co-packaged Optics (CPO) technology, paired with an external laser source module driven by the company's own high-power Indium Phosphide (InP) Continuous-Wave (CW) laser; a multimode slot-integrated CPO built with its high-speed Vertical Cavity Surface Emitting Laser (VCSEL); and a 400G silicon-based indium phosphide modulator. Stifel analyst Ruben Roy noted that Coherent introduced four new products, which are growth engines built on top of Coherent's existing $50 billion serviceable addressable market (SAM). Optical Cross-Connect Systems (OCS) is already generating revenue, CPO/Near-Packaged Optics (NPO) is expected to achieve revenue in the second half of 2026, Multitrack Transport Systems in the first half of 2027, and thermal solutions in the second half of 2027. According to the management's forecast, as data center architectures transition from traditional copper cable connections to optical fiber, the potential market size for CPO alone is expected to exceed $15 billion by 2030, providing a solid industrial foundation for Coherent's long-term valuation growth. Roy added, "Coherent has built its data center product roadmap around three use-case dimensions: horizontal expansion (rack-to-rack/ node-to-node, distances ranging from 10 meters to 10 kilometers, using pluggable transceivers and OCS), vertical expansion (transmission within GPU clusters, replacing copper cables with Co-packaged optics), and cross-data center expansion (allocating artificial intelligence workloads across multiple data centers through data center interconnect (DCI) and transmission). In our view, Coherent remains one of the most comprehensive photonics suppliers serving AI infrastructure construction." This positive news comes shortly after the company's deep strategic partnership with tech giant NVIDIA Corporation, further boosting market confidence. Just two weeks before the conference, NVIDIA Corporation announced a $2 billion investment in Coherent and signed a long-term procurement commitment involving lasers, modulators, and optical transport components, officially integrating Coherent into its AI core supply chain system. Stifel's report emphasizes that Coherent is not just a hardware supplier, but an indispensable technology enabler in the AI ecosystem. With the continued expansion of global AI data centers, the company is poised to occupy a highly competitive premium space in the industry competition in the coming years with its vertically integrated production capabilities and forward-looking technological layout.