At the 2026 Optical Fiber Communication Conference (OFC 2026) held in San Diego, photonics technology company Coherent (COHR) once again captured capital market attention with its groundbreaking demonstrations in the AI data center infrastructure sector. Driven by this technological advancement and optimistic expectations from investment banks, Coherent's stock closed nearly 5% higher on Wednesday at $257.21.

Prominent investment bank Stifel, in a research report released after the event, reaffirmed its positive stance on the company. It significantly increased the price target from $235 to $275 and maintained a "Buy" rating, reflecting strong market recognition of Coherent's central role in next-generation AI computing networks.

At the industry conference, Coherent showcased several key technologies designed to address power consumption and bandwidth bottlenecks in AI clusters. These included the highly anticipated 6.4T pluggable Co-Packaged Optics (CPO) technology, paired with an external laser source module powered by the company's own high-power Indium Phosphide (InP) continuous wave (CW) lasers; a multi-mode pluggable CPO built using its high-speed Vertical-Cavity Surface-Emitting Lasers (VCSELs); and a silicon photonics Indium Phosphide modulator operating at 400G.

Stifel analyst Ruben Roy noted that Coherent has newly introduced four product families. These growth engines are additions to Coherent's existing Serviceable Addressable Market (SAM), which exceeds $500 billion. The Optical Circuit Switching (OCS) system has already begun generating revenue. Revenue from CPO/Near-Packaged Optics (NPO) is anticipated in the second half of 2026, multi-haul transport systems are expected in the first half of 2027, and thermal solutions are projected for the second half of 2027.

According to management forecasts, as data center architecture transitions from traditional copper connections to optical fiber, the potential market size for CPO-related technology alone is expected to surpass $15 billion by 2030. This provides a solid industrial foundation for Coherent's long-term valuation growth.

Roy added, "Coherent is structuring its data center product roadmap around three core use-case dimensions: Scale-out (rack-to-rack/node-to-node, covering distances from 10 meters to 10 kilometers, utilizing pluggable transceivers and OCS), Scale-up (GPU-to-GPU communication within a cluster, employing co-packaged optics to replace copper), and Scale-across (distribution of AI workloads across multiple data centers via Data Center Interconnect (DCI) and transport). In our view, Coherent remains one of the most comprehensive photonics suppliers serving the build-out of AI infrastructure."

This positive news follows shortly after the company's deep strategic collaboration with technology giant NVIDIA (NVDA), further bolstering market confidence. Just two weeks prior to the conference, NVIDIA announced a $2 billion investment in Coherent and signed long-term purchase commitments for lasers, modulators, and optical transmission components, formally integrating Coherent into the core AI supply chain.

Stifel's report emphasized that Coherent is not merely a hardware supplier but an indispensable technology enabler within the AI ecosystem. As the global wave of AI data center expansion continues, the company, with its vertically integrated production capabilities and forward-looking technology strategy, is well-positioned to capture a significant competitive premium in the industry over the coming years.