Shares of Coherent Corp moved higher this week after the company unveiled advances in silicon carbide (SiC) epitaxy technology, reinforcing optimism around its role in powering next-generation AI data centers and industrial systems.
The stock rose as much as 9% on April 10 following the announcement, with additional gains supported by broader strength in the optical networking sector.
Coherent shares have also extended a recent rally, climbing more than 16% over four consecutive sessions.
SiC breakthrough targets high-voltage AI applications
Coherent said its latest development enables the production of power devices capable of handling up to 10 kilovolts, a key requirement for high-efficiency energy systems in AI data centers and industrial infrastructure.
The company’s 150 mm and 200 mm thick epitaxy platforms support device architectures up to 10kV in production, with demonstrated capability extending beyond that threshold.
The innovation is aimed at improving performance in applications such as renewable energy, rail systems, fast-charging infrastructure, and grid networks.
“Our new thick epitaxy capability for multi-kilovolt SiC devices enables customers to achieve higher efficiency and power density in critical applications such as energy infrastructure, high-capacity uninterruptible power supplies, and advanced power distribution systems in AI datacenters,” said Gary Ruland, Senior Vice President, Silicon Carbide LLC.
The technology also addresses growing demand from AI data centers, where enhanced power conversion efficiency can lower energy consumption and operating costs.
Sector momentum adds to rally
Coherent’s gains were further supported by positive sentiment across the photonics sector, particularly following strong demand signals from peer Lumentum Holdings Inc..
Lumentum’s CEO indicated the company is on track to sell out its capacity through 2028, reflecting sustained demand from hyperscalers building out AI infrastructure. The company’s shares rose modestly on the news, while Coherent also benefited from the broader momentum.
Both companies have seen substantial gains over the past year, driven by a surge in capital spending by hyperscalers. These firms play a critical role in enabling communication between AI chips, complementing hardware providers such as Nvidia.
Analysts have responded positively to the outlook. TD Cowen analyst Joshua Buchalter raised his price target on Coherent to $340 from $330 while maintaining his rating. Similarly, J.P. Morgan analyst Samik Chatterjee reiterated an Overweight rating and lifted his target to $300 from $245.
Chatterjee noted that investor discussions around the Optical Fiber Communications Conference “collectively delivered a stronger-than-expected level of forward visibility across various growth drivers.”
Valuation and risks remain in focus
Despite the strong momentum, Coherent’s valuation remains elevated. The stock is currently trading at a price-to-earnings ratio of 301.6, reflecting high expectations for future growth.
At the same time, insider activity has pointed to some caution, with approximately $4.9 million in shares sold over the past three months.
Still, the company’s positioning across multiple high-growth markets—including communications, industrial, and energy—continues to support its long-term outlook.
Coherent, which has a market capitalization of about $57.1 billion, is vertically integrated across lasers, transceivers, and optical components.
As demand for efficient, high-voltage power solutions accelerates alongside the expansion of AI data centers, Coherent’s latest SiC advancements could play a pivotal role in shaping its growth trajectory.
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