Coherent

COHR

Market cap $73.7B

Fund manager Gavin Baker identified a "cross-sectional inefficiency" in AI stocks. He argued that valuations can't be accurate for both the cheap and expensive stocks in AI.

Shares of Applied Optoelectronics (NASDAQ:AAOI) are down 9% midday Friday to roughly $154, leading a broader cool-off in AI optics names.

Coherent's AI infrastructure demand, rising bookings and strong liquidity give COHR an edge over APP's premium valuation.

AXTI is gaining momentum in AI photonics as record backlog, rising indium phosphide demand and capacity growth fuel its early-cycle story.

CIEN posts record $1.43B Q1 and $7B backlog while COHR ramps 800G/1.6T and CPO with NVIDIA.

Keith Kaplan, CEO of TradeSmith, has spent recent months mapping what he calls the "choke points" of the AI build-out—the physical bottlenecks where trillion-dollar demand is running into a world that can't supply fast enough. His argument: the largest fortunes of this AI cycle won't go to the visible players.

Coherent has transitioned from a cyclical optical supplier to a strategic AI infrastructure enabler, supporting a structural rerating in valuation. Q3 revenue grew 27% and EPS 55%, with datacenter exposure rising to 75% and strong backlog visibility extending into 2028 and beyond. COHR's 6-inch indium phosphide ramp and broad AI ecosystem positioning underpin confidence in sustained high growth through FY2027 and FY2028.

Investors know Nvidia Corp.(NASDAQ:NVDA) as a GPU supplier powering the artificial intelligence boom. But the chip giant's latest portfolio disclosure suggests CEO Jensen Huang may be placing a significant bet on another part of the AI stack: the infrastructure that moves data between those chips.

The eye-catching performance of some of the world's largest stocks has led to them becoming fixtures in investors' portfolios. Whether that exposure comes via market-cap-weighted funds or direct ownership, the stocks' collective gains have overshadowed the roughly 2,500 other U.S.-listed stocks that do not meet the criteria for inclusion in the S&P 500.

Credo is betting big on AEC adoption, new product families and a $750M DustPhotonics deal - while Coherent scales transceivers and OCS.