Coherent (COHR) Gets Higher Price Target From Morgan Stanley on Bullish Optical Markets Forecast

Why It Matters

The upgraded targets signal strong confidence in Coherent's ability to capture a rapidly expanding optical market, positioning the stock for potential upside amid rising AI‑driven capex.

Key Takeaways

• Morgan Stanley lifts Coherent target to $250.
• BofA raises target to $250, neutral rating.
• Optical market could reach $90B, $23B TAM growth.
• Capex forecast $748B 2026, $869B 2027.
• Hedge funds added 29 holders Q4 2025.

Pulse Analysis

The optical communications sector is at a inflection point as legacy copper and fiber networks strain under data‑intensive applications. Industry analysts forecast that next‑generation photonic components—such as integrated lasers and modulators—will unlock an additional $23 billion of revenue, pushing the total addressable market toward $90 billion. This growth is driven by the convergence of 5G, edge computing, and artificial‑intelligence workloads that demand higher bandwidth and lower latency, creating a fertile environment for companies with advanced photonic portfolios.

Coherent Corp., a leading developer of engineered materials and laser technologies, stands to benefit directly from this market tailwind. Morgan Stanley’s Meta Marshall and BofA’s analysts both elevated the stock’s price target to $250, reflecting confidence in Coherent’s product pipeline and its alignment with AI‑related capital‑expenditure cycles. The firm’s projected capex of $748 billion in 2026 and $869 billion in 2027 underscores the scale of investment flowing into optical and AI infrastructure, positioning Coherent as a key supplier for high‑performance lasers and opto‑electronic components.

For investors, the confluence of analyst upgrades, robust hedge‑fund interest, and a booming optical market creates a compelling narrative. While the stock now trades at a premium relative to its historical multiples, the potential upside from market expansion and AI‑driven demand may justify the valuation. However, investors should weigh the competitive landscape and execution risk, as alternative photonics firms also vie for market share. Overall, Coherent’s strategic positioning in a $90 billion market makes it a noteworthy play for those seeking exposure to the next wave of optical and AI infrastructure growth.