COHR · Coherent, Inc.

CPO (co-packaged optics) is a massive thematic opportunity, with TAM growing from $0 to $91B, favoring non-US players like SIVE, SOI, and Asian component/foundry companies, as US legacy players face cannibalization.

Sold LITE positions at ~$385 due to potential issues from internal research; still a good long-term but lower conviction than NBIS.

Supply chain bottleneck in China-based substrate production and laser-grade Indium Phosphide (AXTI) could cause extreme delays in AI buildout, making capacity extremely valuable. Valuation math suggests backlog could be worth multiples if material becomes critical.

Coherent ($COHR) faces supply chain risk: it depends on merchant market for 6N InP polycrystal feedstock; if suppliers like Vital Materials or $AXTI cut off, its laser/transceiver business halts, bottlenecking hyperscaler buildout.

Japanese export controls on InP substrates threaten photonics supply chain, potentially straining LITE and others, but AXTI capacity expansion and pricing premiums could offset.

Photonic supply chain bottlenecks represent an investment opportunity similar to HBM bottlenecks, as hyperscalers hoard materials and acquire capacity. Focus on vertically integrated players like AXTI and upstream suppliers like Sumitomo and Dowa.

Base case for ?? (unnamed company) is to become a US version of Innolight/Eoptolink worth $50B+; even at 60-70% of targets, significant re-rating expected.

Coherent's CEO reaffirmed CPO as a massive revenue driver, with initial scale-out revenue in H2 2026 and scale-up in H2 2027, suggesting frontrunning CPO names before market pricing.