By Connor Hart
Shares of Coherent and Lumentum rose after Raymond James upgraded both stocks, citing an expectation of heightened demand for the companies' products amid the ongoing artificial-intelligence boom.
In midday trading, Coherent's stock was trading 11% higher at $76.04, and Lumentum's stock was up 9.7% at $73.06.
Despite having lost nearly a quarter of their value in the past three months, shares of Coherent are up 22% in the past year. Lumentum's stock has climbed 43% in the past year, though it has fallen 12% in the past three months.
Concerns over co-packaged optics--which seek to integrate optics and silicon on a single semiconductor chip and are aimed at addressing next-generation bandwidth and power challenges--have pressured the stocks in recent months, Raymond James analysts said in a research note.
These concerns, however, are overblown, the analysts wrote. Both companies possess key technologies that were included in Nvidia's product roadmap, unveiled during the chipset and software company's recent analyst day conference.
Additionally, the total AI and non-AI datacom market is growing, analysts said. Meanwhile, the telecom industry is recovering, already benefiting from recent AI builds.
Raymond James upgraded Coherent and Lumentum to strong buy from outperform. The bank lowered Coherent's price target to $91 from $110, as well as Lumentum's price target to $82 from $96.
Write to Connor Hart at connor.hart@wsj.com
(END) Dow Jones Newswires
March 24, 2025 12:30 ET (16:30 GMT)
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