COHERENT's stock surged 5.57% in pre-market trading on Thursday, as the optical communications sector experienced a broad rally.
The significant pre-market gain follows positive developments for the company's indium phosphide (InP) manufacturing capabilities. NVIDIA CEO Jensen Huang recently joined Coherent's CEO for the groundbreaking ceremony of the company's InP factory expansion in Sherman, Texas. The expansion project aims to double the production area and quadruple wafer capacity for 6-inch InP wafers and optical interconnects.
Coherent has secured a $50 million subsidy under the CHIPS Act to support this expansion. Additionally, NVIDIA has made a $2 billion investment in Coherent and signed a long-term procurement agreement. The move is bolstered by institutional forecasts projecting that AI data center demand for InP will grow at a compound annual rate of 85%, providing sustained market confidence in Coherent's growth trajectory.
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