Analyst(s): Futurum Research
Publication Date: February 6, 2026

Coherent’s Q2 FY 2026 results highlight accelerating AI datacenter optics demand, rising mix of 800G and 1.6T transceivers, and improving non-GAAP profitability. Management emphasized exceptional bookings visibility, ongoing 6-inch indium phosphide (InP) capacity ramp, and growing traction in optical circuit switches (OCS) and co-packaged optics (CPO).

What is Covered in this Article:

• Coherent’s Q2 FY 2026 financial results
• 800G and 1.6T datacenter optics acceleration
• 6-inch indium phosphide capacity expansion
• OCS and CPO traction with hyperscalers
• Guidance and Final Thoughts

The News: Coherent (NYSE: COHR) reported Q2 FY 2026 revenue of $1.7 billion, up 17.5% year over year (YoY), versus Wall Street consensus of $1.6 billion. Datacenter & Communications revenue was $1.2 billion, up 33.6% YoY; Industrial revenue was $478 million, down 9.9% YoY. Non-GAAP operating income was $336 million, up 26.8% YoY, with non-GAAP operating margin at 19.9%, up 147 basis points (bps) YoY. Non-GAAP net earnings were $248 million, up 34.3% YoY, and non-GAAP diluted EPS was $1.29, up 35% YoY.

“We delivered strong year-over-year revenue growth in the December quarter, driven by another quarter of strong demand in our datacenter and communications segment. We expect continued strong growth in the second-half of FY 2026 and throughout FY 2027 based on strong datacenter and communications demand and our continued production capacity expansion along with improving demand in our Industrial segment.”, said Jim Anderson, CEO of Coherent.

Coherent Q2 FY 2026: AI Datacenter Demand Lifts Revenue and Margins

Analyst Take: Coherent’s Q2 FY 2026 print underscores durable momentum in AI datacenter optics, with bookings visibility extending through calendar 2026 and into 2027, and a rapid 6-inch InP manufacturing ramp that improves cost structure and supports mix shift to higher-ASP 1.6 terabits per second (T). Management’s commentary points to sequential growth in the March and June quarters, alongside rising Optical Circuit Switch (OCS) backlog and a landmark Co-Packaged Optics (CPO) purchase order with initial revenue later this year. Communications demand remains broad-based across Data Center Interconnect (DCI) and traditional telecom, providing an additional underpinning to near-term growth. Portfolio streamlining and disciplined capital allocation further strengthen margin and EPS trajectory into FY 2027.

AI Datacenter Transceivers: 800G and 1.6T Acceleration

Coherent reported an acceleration in datacenter revenue, citing strong growth in both 800 gigabits per second (G) and 1.6T transceivers, with book-to-bill in the segment above 4x as customers placed orders further into the future. Management expects double-digit sequential growth in datacenter revenue in both the March and June quarters, with 1.6T ramping meaningfully across multiple customers. The 1.6T trajectory is led by EML and silicon photonics platforms initially, with 200G VCSEL-based 1.6T transceivers expected to ramp in the second half of calendar 2026. Importantly, Coherent expects 1.6T module gross margins to be higher than 800G given higher ASPs, particularly early in the lifecycle, and further aided by 6-inch InP cost advantages. With most of calendar 2026 already booked and calendar 2027 filling quickly, the company’s visibility is the strongest it has been, supported by long-term supply agreements and multi-year forecasts from key hyperscalers. This setup supports sustained mix-driven growth and profitability gains over the next several quarters.

6-Inch Indium Phosphide Capacity Expansion

Coherent is executing ahead of plan on its 6-inch InP ramp, already at roughly 80% of its target wafer-start rate to double internal InP capacity by Q4 of calendar 2026. Wafer starts more than quadrupled from the September to December quarter, with yields on 6-inch exceeding those of legacy 3-inch lines. Production now spans EMLs, continuous-wave (CW) lasers, and photodiodes on 6-inch in Sherman, Texas, and Tarfala, Sweden, with multiple substrate suppliers secured to support the capacity goal. The company will continue to supplement internal capacity with external EML sourcing, which increased sequentially and is expected to grow again this year. Assembly capacity is expanding in Malaysia, Vietnam, and other locations to match component output, reinforcing end-to-end vertical integration. These manufacturing dynamics enhance supply assurance and reduce unit costs, bolstering margin expansion in transceivers.

OCS and CPO Traction Across Hyperscale

OCS backlog grew sequentially, with over 10 customer engagements across 64/64 and 320/320 systems, and an addressable market the company now sizes at more than $2 billion over the coming years. Coherent expects OCS revenue to grow sequentially throughout calendar 2026 as production ramps to meet demand. On CPO, the company secured an exceptionally large purchase order from a market-leading AI datacenter customer for a solution anchored by a new high-power CW laser produced on its 6-inch InP line in Sherman, with initial revenue expected toward the end of calendar 2026 and a more material contribution next year. Management anticipates CPO deployments initially in scale-out architectures, with substantial scale-up opportunities to follow as intra-rack networks shift from electrical to optical. Complementing CPO, communications demand remains broad-based across ZR/ZR+ coherent pluggables and traditional telecom, alongside a multiyear design win with a leading DCI OEM using Coherent’s uncooled 3-pin micropump. These wins broaden revenue drivers beyond transceivers and support a multi-year growth runway in hyperscale and carrier networks.

Guidance and Final Thoughts

For Q3 FY 2026, Coherent guided revenue to $1.7 billion–$1.84 billion, non-GAAP gross margin to 38.5%–40.5%, non-GAAP operating expenses to $320 million–$340 million, tax rate to 18%–20%, and non-GAAP EPS to $1.28–$1.48. The late-January sale of the Munich tools business (approximately $25 million average quarterly revenue at below-corporate gross margin) is expected to be immediately margin and EPS accretive, with proceeds earmarked to reduce interest expense; headcount is reduced by approximately 425. Management has exited 10 sites in the past quarter and 33 sites over six quarters as part of ongoing portfolio optimization and ERP consolidation, improving SG&A leverage. Capital expenditures were $154 million in Q2 and are set to increase sequentially to support rapid capacity expansion in data center and communications. With debt leverage at 1.7x and strong bookings visibility into 2027, Coherent appears positioned to outgrow FY 2026 in FY 2027 while expanding margins.

See the full press release on Coherent’s Q2 FY 2026 financial results on the company website.

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Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.

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