Coherent (COHR): Unmet Hyperscaler Demand Fuels Aggressive Capacity Expansion

Coherent (COHR): Unmet Hyperscaler Demand Fuels Aggressive Capacity Expansion

Thu, September 17, 2026 at 4:54 PM GMT+3 3 min read

• COHR +2.03%

Reaves W H & Co Inc's second-quarter 2026 investor letter reports a 10.55% increase for its "Reaves Long Term Value Wrap Strategy," outperforming the MSCI USA Infrastructure Index's 6.31% decline. The letter can be downloaded here. Cash distributions grew 6.7% in the quarter compared to Q2 2025. Despite geopolitical uncertainty, investor sentiment remained strong. AI expansion benefits companies in construction, connectivity, and infrastructure, especially in utility, communication, engineering, electrical, and power sectors. The strategy's performance benefited from investments across the AI infrastructure ecosystem and support for physical infrastructure supporting AI at scale. Although risks persist, the long-term investment case for many companies remains strong, positioning the strategy for durable growth, increasing dividends, and attractive long-term returns. Additionally, reviewing the Fund's top five holdings could help identify its best picks for 2026.

In its second-quarter 2026 investor letter, Reaves Long Term Value Wrap Strategy highlighted Coherent Corp (NYSE:COHR) as a leading performance contributor. Coherent Corp. manufactures and markets engineered materials, optoelectronic components and devices, as well as laser systems used across data center, industrial, and communications applications. On September 16, 2026, Coherent Corp. (NYSE:COHR) closed at $289.93 per share. Over the past month, Coherent Corp. (NYSE:COHR) declined 0.03%, but its shares are up 168.33% over the past year. Coherent Corp. (NYSE:COHR) has a market capitalization of $56.78 billion, and its stock has traded within a 52-week range of $102.14 and $440.00.

Reaves Long Term Value Wrap Strategy stated the following regarding Coherent Corp. (NYSE:COHR) in its Q2 2026 investor letter:

"Coherent Corp. (NYSE:COHR): Shares of Coherent staged a bit of a catch-up rally to optical peers during the quarter, with industry momentum still fueled by robust commentary on supply/demand imbalances and Nvidia's large investment and purchase agreements from March. Specifically, every major optics vendor appears to be aggressively ramping capacity to serve a still-undersupplied base of hyperscaler customers through the back half of this decade. This dynamic has created pricing power, leading to material margin enhancement alongside the generational growth."

Coherent Corp. (NYSE:COHR) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 105 hedge fund portfolios held Coherent Corp. (NYSE:COHR) at the end of the second quarter, compared to 114 in the previous quarter. While we acknowledge the potential of Coherent Corp. (NYSE:COHR) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we discussed Nvidia's $2 Billion investment in Coherent Corp. (NYSE:COHR). In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

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This article is originally published at Insider Monkey.