What Happened?
Shares of materials and photonics company Coherent (NYSE: COHR) jumped 17.4% in the afternoon session after it hit an all-time high following Jensen Huang's Computex keynote, in which the Nvidia CEO specifically highlighted the accelerating demand for high-speed optical connectivity inside hyperscale AI data centers.
Marvell designs the chips that manage that connectivity. Coherent builds the actual hardware, the optical transceivers and interconnects that carries the light between them. Huang's endorsement carries direct strategic weight for Coherent.
Nvidia has made a disclosed strategic equity investment in the company, validating Coherent's indium phosphide optics technology as critical to next-generation AI infrastructure. At its May 6 earnings, management confirmed that demand for its AI optical transceivers is now booked out through 2028.
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What Is The Market Telling Us
Coherent’s shares are extremely volatile and have had 54 moves greater than 5% over the last year. But moves this big are rare even for Coherent and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 18 days ago when the stock dropped 3.9% on the news that investors reacted to a cocktail of negative macroeconomic news, including surging oil prices and rising Treasury yields.
The 10-year Treasury note yield jumped to 4.56%, a one-year high, fueling concerns about inflation and potential interest rate hikes. Compounding these worries, WTI crude oil prices rose to around $104 per barrel amid geopolitical tensions. The market sentiment was also dampened by a general disappointment that the recent summit between President Trump and Chinese President Xi ended without any major agreements. This combination of factors led to a broad-based sell-off, pulling major indices like the S&P 500 and Nasdaq down from their recent record highs.
Coherent is up 117% since the beginning of the year, and at $421.19 per share, it has set a new 52-week high. Investors who bought $1,000 worth of Coherent’s shares 5 years ago would now be looking at an investment worth $6,188.
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