At the 2026 Optical Fiber Communication Conference (OFC 2026) held in San Diego, photonics technology company Coherent (COHR.US) once again became a focal point for capital markets due to its breakthrough demonstrations in AI data center infrastructure. Driven by this technological advancement and optimistic expectations from investment banks, Coherent's stock closed nearly 5% higher on Wednesday at $257.21. In a post-conference research report, the well-known investment bank Stifel reaffirmed its positive stance on the company, significantly raising its price target from $235 to $275 and maintaining a "Buy" rating. This reflects strong market recognition of the company's central role in next-generation AI computing networks.

At this premier industry event, Coherent showcased several key technologies designed to address the 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 lines, which serve as growth engines layered on top of the company's existing Serviceable Addressable Market (SAM) exceeding $50 billion. The Optical Circuit Switching (OCS) system has already begun generating revenue. CPO/Near-Packaged Optics (NPO) are expected to contribute revenue in the second half of 2026, multi-link interconnect systems in the first half of 2027, and thermal solutions in 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 technologies alone is projected 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, using CPO 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.US), further strengthening market confidence. Just two weeks prior to the conference, NVIDIA announced a $2 billion investment in Coherent and signed a long-term supply commitment covering 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 manufacturing capabilities and forward-looking technology strategy, is well-positioned to capture a highly competitive premium in the industry competition over the coming years.