Coherent

Coherent reported Q4 FY2026. EPS came in at $1.74 against a $1.62 consensus, beat by 7.4%. Revenue was $2.0B versus $2.0B expected, beat by 3.1%. Gross margin was 38.5%, up 80 bps from last quarter.

Coherent's Q3 FY2026 results exceeded street estimates, with revenue and EPS both beating expectations. The company's strong performance is driven by strong demand in AI data centers and communications, and it is well-positioned for continued growth in fiscal 2027.

Coherent cleared the Street, but the actionable surprise is the combination of faster data-center optics ramps, rising capex, and a Q3 guide that implies the AI mix is absorbing divestiture drag. The market may still be treating the print as a cyclical photonics recovery, while the numbers point to a capacity-constrained AI interconnect supplier moving toward higher-margin revenue.

Coherent cleared the Street by only +1.7% on revenue, but the EPS surprise of +11.5% says the market was too cautious on operating leverage and mix. The variant view is that this print should be valued less as a one-quarter AI optics beat and more as evidence that Datacenter and Communications demand, 1.6T adoption, and indium phosphide capacity are pulling gross margin toward the company’s greater than 42% target faster than consensus likely modeled.

Coherent missed revenue by -1.2%, but the actionable surprise was EPS at $1.00 versus $0.92, because the company is turning AI datacenter and telecom recovery into margin faster than the top line shows. The market was priced for a clean revenue beat; the print argues instead for owning the mix upgrade into fiscal 2026, with the risk centered on whether 1.6T, ZR/ZR+ and CPO timing can outrun a deliberately conservative September guide.