Coherent just smashed Q2 2026 earnings, raking in $2.05B in revenue—up 33.7% year-over-year—and $1.74 EPS, fueled by booming AI-driven demand in data centers and communications. Despite the stellar results, the stock dipped as management flagged supply chain hurdles, especially around indium phosphide production—a critical piece for optical networking. They’re pouring resources into scaling six-inch lines, which are already boosting transceiver output and yields, paving the way for stronger margins. New markets like optical circuit switching (now doubling in size) and integrated optics, including CPO and NPO projects, are emerging as key growth engines. The real test? How fast they can scale indium phosphide capacity and get customers to adopt their new tech platforms—because execution will determine if this momentum lasts.
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