Coherent (COHR) Morgan Stanley Technology, Media & Telecom Conference 2026 summary

Strategic partnerships and agreements

• Announced a significant expansion of partnership with NVIDIA, including a $2 billion equity investment and a multi-year, multi-billion dollar R&D and supply chain agreement focused on photonics and optics for data center innovation and power efficiency.

• The NVIDIA agreement covers multiple product lines, notably high-power CW lasers for CPO, and is expected to drive substantial revenue and catalyze more long-term agreements with other customers.

Capital allocation and capacity expansion

• Top priority for capital allocation is expanding manufacturing capacity, especially at the Sherman, Texas facility, to meet demand for CPO solutions.

• Proceeds from divestitures and investments have been used to pay down debt and fund capacity increases, with leverage ratio reduced to 1.7, below the target of 2.

• CapEx investments are supported by a strong balance sheet and are focused on long-term growth.

Portfolio optimization and investment focus

• Annual portfolio reviews have led to increased investment in high-growth, high-margin areas like data center communications and divestiture of non-strategic, lower-margin businesses.

• Incremental investments are prioritized based on immediate large orders and long-term growth potential, with a focus on data center, pluggable transceivers, and CPO technologies.