BofA Raises Coherent Price Target to $400 as AI Data Center Market Forecast Climbs to $1.7 Trillion
BofA Raises Coherent Price Target to $400 as AI Data Center Market Forecast Climbs to $1.7 Trillion
Bank of America has raised its price target on Coherent Corp. to $400 from $365, while keeping a Neutral rating on the stock. The move follows BofA’s higher forecast for the artificial intelligence data center systems market, which it now sees reaching about $1.7 trillion by 2030, up from its previous estimate of $1.4 trillion.
Why Coherent Is Getting More Attention
Coherent has become one of the companies closely watched by investors because of its role in optical components, lasers, photonics, and data center communications. As AI systems grow larger, data centers need faster and more reliable ways to move huge amounts of information between chips, servers, and storage systems.
This is where Coherent’s technology matters. AI data centers depend heavily on high-speed optical connections because traditional copper connections can struggle with distance, heat, and bandwidth demands. Fiber optics can carry data quickly over longer distances, making them essential for large AI computing clusters.
BofA’s AI Data Center Forecast
Bank of America’s new estimate suggests that AI infrastructure spending may be larger than previously expected. The firm now projects the AI data center systems total addressable market could reach roughly $1.7 trillion by calendar year 2030. This larger forecast helped support price target increases for several AI infrastructure-related companies, including Coherent.
The key idea behind the report is simple: AI demand is not slowing down. Companies are building bigger data centers, buying more advanced chips, and upgrading networking systems to handle AI workloads. Optical technology suppliers may benefit because they provide critical parts of this infrastructure.
Coherent’s Recent Business Momentum
Coherent’s Datacenter & Communications segment reported $1.361 billion in fiscal third-quarter 2026 revenue, rising 41% year over year and making up about 75% of total company revenue. Overall fiscal Q3 2026 revenue reached $1.805 billion, up 21% from the prior year, with non-GAAP earnings per share of $1.41.
CEO Jim Anderson said the company is expanding capacity as AI data center infrastructure continues to scale. That statement reflects how strong customer demand has become across the AI hardware supply chain.
Why the Rating Stayed Neutral
Even though BofA raised the price target, it did not upgrade the stock rating. The Neutral rating suggests that analysts see upside potential, but also believe much of the good news may already be reflected in Coherent’s share price.
According to the report, Coherent shares had already gained roughly 118% year to date. That strong rally makes valuation a major concern. The stock was cited as trading at about 182 times trailing earnings and around 45 times forward earnings, which may be too expensive for cautious investors.
Opportunities and Risks for Investors
The opportunity is clear: if AI data center spending keeps expanding, Coherent may continue to benefit from demand for optical networking and photonics products. Its technology supports the movement of massive data volumes inside advanced AI systems.
However, risks remain. The company still carries long-term debt, and its industrial segment has shown weakness. The report also noted that Coherent’s Q4 FY2026 guidance calls for revenue between $1.91 billion and $2.05 billion, with non-GAAP EPS expected between $1.52 and $1.72.
Bottom Line
BofA’s higher $400 price target confirms growing confidence in the AI optical infrastructure theme. Coherent is positioned as an important supplier in the data center buildout, especially as AI clusters require faster and more powerful networking systems.
Still, the Neutral rating sends a balanced message. Coherent has strong growth potential, but its sharp stock rally and rich valuation mean investors may need to be selective and careful. For long-term investors, Coherent remains a key AI infrastructure stock to watch, but not necessarily one to chase without considering risk.
#Coherent #AIDataCenters #COHRStock #AIInfrastructure #SlimScan #GrowthStocks #CANSLIM