Analyst(s): Futurum Research
Publication Date: November 6, 2026
Coherent added a second anchor customer for PhotonLink as AI data centers adopted faster optical links. Higher laser output and growing sales of systems that connect data centers are broadening its role in AI networks.
What Is Covered in This Article:
- Coherent’s Q1 FY 2027 financial results
- PhotonLink secures second anchor customer
- Laser capacity supports transceiver growth
- Optical systems connect AI campuses
- Guidance and Final Thoughts
The News: Coherent (NYSE: COHR) reported Q1 FY 2027 revenue of $2.37 billion, up 50% year over year (YoY), above Wall Street consensus of $2.31 billion and near the top of its prior $2.20 billion to $2.40 billion guidance range. Datacenter and Communications revenue rose 79.1% YoY to $1.95 billion, while Industrial revenue fell 14.8% YoY to $418.6 million. Non-GAAP operating income increased 78.1% YoY to $550.3 million, while non-GAAP operating margin rose 368 basis points to 23.2%. Non-GAAP net earnings attributable to Coherent rose 91% YoY to $422 million, and non-GAAP diluted earnings per share (EPS) increased 80% YoY to $2.09.
“Our established businesses delivered strong growth, while new growth areas are beginning to ramp. As AI data centers transition from copper to optical connectivity, Coherent’s broad photonics platform and manufacturing scale position us to help customers meet rising needs for bandwidth and energy efficiency. We expect fiscal 2027 pro forma revenue growth to exceed 60%,” said Jim Anderson, CEO of Coherent.
Coherent Q1 FY 2027: PhotonLink Wins Broaden AI Infrastructure Reach
Analyst Take: Coherent is supplying more of the optical connections as AI infrastructure expands within and between data centers. Within a site, customers are adopting faster pluggable transceivers while qualifying integrated optics for links closer to compute and switching chips. Between sites, demand for higher-capacity links is giving Coherent room to sell complete systems alongside individual components. The near-term test is how quickly Coherent can turn added laser capacity and customer qualifications into volume shipments across these markets.
PhotonLink Wins a Second Anchor Customer
Coherent signed a five-year PhotonLink agreement with an undisclosed AI customer, valuing the agreement at approximately $20 billion with revenue expected to start in early calendar 2028. The agreement adds a second anchor customer alongside NVIDIA and covers an optical solution built around a 400-milliwatt laser. Initial PhotonLink deployments use co-packaged optics (CPO) to connect systems across data center networks. Beyond the two anchor customers, Coherent has more than 10 CPO engagements and more than 10 near-packaged optics engagements, plus more than five chip-to-chip engagements. Supporting multiple designs gives Coherent a route into networks where buyers make different choices about how close to the chip to place optical components. Adoption across additional customers and network designs will show how widely Coherent can sell the integrated platform.
Laser Capacity Supports the Transceiver Ramp
Coherent is ramping 1.6-terabit-per-second transceivers with multiple customers while sales of 800-gigabit-per-second modules continue to grow. Supporting both speeds keeps capacity planning tied to two product generations, with the mix depending on customers’ deployment schedules. Coherent doubled internal indium phosphide output capacity YoY in Q1 FY 2027, one quarter ahead of plan. Its six-inch lines in Texas and Sweden are delivering higher yields than its three-inch lines across lasers and photodiodes. The same manufacturing base supplies lasers for pluggable modules and PhotonLink, giving Coherent flexibility to allocate capacity as orders shift. Higher yields can improve module economics as Coherent replaces more externally sourced components with its own devices.
Optical Systems Connect More AI Campuses
Revenue from optical links between data centers exceeded $200 million in Q1 FY 2027, up 53% sequentially and nearly fourfold YoY. These links have become the largest revenue source within Coherent’s communications business. Coherent has expanded its offering beyond pump lasers to include line cards and complete optical systems. Its multi-rail design helps operators carry more traffic over existing fiber as computing capacity spreads across sites. Coherent reached its current sales level ahead of the multi-rail ramp, establishing a demand base for components and systems already shipping. The multi-rail rollout will test whether Coherent can capture more spending per link as operators expand capacity across campuses.
Guidance and Final Thoughts
Coherent guided Q2 FY 2027 revenue to $2.55 billion to $2.75 billion, with the $2.65 billion midpoint approximately 4% above Wall Street consensus of $2.55 billion and implying nearly 12% sequential growth. Non-GAAP gross margin is expected to range from 40% to 42%, with non-GAAP diluted EPS of $2.28 to $2.48. Management expects FY 2027 pro forma revenue growth exceeding 60%, excluding divested businesses, and anticipates reaching its first $3 billion revenue quarter by the end of FY 2027, followed by its first $4 billion quarter in FY 2028. Coherent also targets its first quarterly non-GAAP gross margin above 45% before the end of calendar 2028. PhotonLink revenue is expected to exceed $100 million in the March 2027 quarter and reach more than $250 million quarterly before the end of calendar 2027, ahead of the second anchor customer’s anticipated revenue contribution beginning in early calendar 2028.
Coherent’s outlook reflects a growing opportunity to capture optical spending across transceivers, integrated photonics, and inter-data-center connectivity as AI networks become larger and more complex. The second PhotonLink anchor agreement, valued at approximately $20 billion over five years, strengthens long-term revenue visibility, while the expansion of internal indium phosphide manufacturing capacity could improve supply flexibility and component economics. However, the scale of anticipated growth raises execution requirements across laser yields, customer qualifications, and simultaneous product ramps, particularly as 800-gigabit and 1.6-terabit transceivers coexist with emerging co-packaged optics deployments. The company’s margin targets will depend on converting higher manufacturing output into cost efficiencies while expanding its share of complete optical systems. Sustained PhotonLink shipments ahead of the second anchor customer’s ramp, alongside growth in optical systems connecting data centers, would provide stronger evidence that Coherent’s revenue expansion can extend beyond its current transceiver cycle.
See the full press release on Coherent’s Q1 FY 2027 financial results on the company website.
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Other Insights From Futurum:
Coherent Q4 FY 2026 Earnings: 1.6T Transceivers Ramp, CPO Revenue Approaches
Coherent’s $23 Billion Growth Opportunity Lifted by NVIDIA’s Optical Ambitions
Coherent PhotonLink Raises Its TAM to $90 Billion. Will Bundling Win CPO?
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