Coherent reported fiscal third quarter 2026 revenue of $1.81 billion, up 21% year-over-year, as accelerating demand for AI datacenter infrastructure and optical communications continued to drive growth across its photonics portfolio. GAAP gross margin reached 37.7%, up 243 basis points year-over-year, while non-GAAP gross margin improved to 39.6%. GAAP diluted EPS was $0.97, compared to a loss of $0.11 per share in the year-earlier quarter, while non-GAAP EPS climbed to $1.41 from $0.91 a year ago.
The company cited particularly strong momentum in datacenter and communications markets tied to AI cluster scaling and next-generation optical interconnect deployments. Quarterly revenue increased 7.1% sequentially from $1.69 billion in the prior quarter. Non-GAAP operating income rose 31% year-over-year to $366 million, while operating margin expanded to 20.3%. Coherent said it continues to ramp manufacturing capacity and capital investments to support long-term AI infrastructure demand.
For fiscal Q4 2026, Coherent projected revenue between $1.91 billion and $2.05 billion, with non-GAAP gross margin expected between 39% and 41%. The company forecast non-GAAP EPS between $1.52 and $1.72. Management indicated that visibility into customer demand remains strong, particularly for optical networking and datacenter photonics products supporting large-scale AI deployments.
- Q3 FY2026 revenue reached $1.81 billion, up 21% year-over-year
- GAAP gross margin improved to 37.7%; non-GAAP gross margin reached 39.6%
- GAAP EPS increased to $0.97 from a loss of $0.11 a year earlier
- Non-GAAP EPS rose to $1.41, up 55.9% year-over-year
- Non-GAAP operating margin expanded to 20.3%
- Q4 FY2026 revenue guidance ranges from $1.91 billion to $2.05 billion
- AI datacenter and communications infrastructure drove demand growth
- Coherent continues expanding manufacturing capacity for photonics products
“We delivered another quarter of strong financial performance, with accelerating revenue growth, expanding margins, and improving profitability, driven by exceptionally strong demand across our datacenter and communications businesses,” said Jim Anderson, CEO of Coherent. “As AI datacenter infrastructure continues to scale, we are rapidly expanding capacity to meet demand.”
🌐 Analysis: Coherent continues emerging as one of the major photonics beneficiaries of the AI infrastructure buildout, particularly as hyperscalers and cloud providers scale optical connectivity inside GPU clusters and between AI factories. The company’s portfolio spans optical transceivers, silicon carbide materials, lasers, indium phosphide, optical engines, and networking components used throughout AI networking stacks. Strong margin expansion suggests improving manufacturing leverage as volumes ramp across datacenter optics.
🌐 The broader optical ecosystem also continues consolidating around AI infrastructure demand. Recent strategic moves across the sector include NVIDIA’s long-term manufacturing and optical infrastructure partnerships with companies such as Corning, Coherent, and Lumentum to secure supply chains for next-generation AI clusters. The industry is simultaneously accelerating transitions toward 800G and 1.6T optical interconnects, co-packaged optics research, and expanded silicon photonics manufacturing capacity to support multi-gigawatt AI datacenter deployments.
🌐 We’re tracking the latest developments in networking silicon. Follow our ongoing coverage at: https://convergedigest.com/category/semiconductors/
