Coherent Stock Falls 23% This Year. AI To The Rescue?
Coherent stock (NYSE:COHR), a prominent player in photonics technology, provides materials, photonics, and laser technologies to a variety of end markets, has decreased by nearly 23% year-to-date in 2025. This decline has been fueled by a mixed macroeconomic environment, somewhat cautious near-term forecasts from the company earlier this year, along with a broader market shift away from certain high-growth AI and tech stocks. Nevertheless, Coherent's fundamental performance has remained quite robust. In Q3, revenue (June fiscal year) increased by 24% year-over-year to $1.5 billion, and earnings surged to $0.91 per share on an adjusted basis, rising by $0.53 compared to last year. On a separate note, see – Should You Buy CRWV Stock After A Whopping 4x Rise?
Coherent has been placing an increasing emphasis on artificial intelligence (AI) products. The robust revenue performance over the previous quarter is primarily attributed to the strong demand for its AI/ML-related transceivers, with revenue from the 800G model, utilized for ultra-fast data transmission, skyrocketing nearly 80% sequentially to nearly $200 million. AI necessitates the transfer of large volumes of data with very low latency requirements, and Coherent is well-equipped as it boasts one of the most extensive portfolios of photonic technologies essential for high-speed optical data transmission.
Considering the valuation based on sales or profit per dollar, COHR stock appears slightly undervalued in comparison to the broader market. Coherent has a price-to-sales (P/S) ratio of 2.2 compared to a figure of 3.0 for the S&P 500. Moreover, the company's price-to-free cash flow (P/FCF) ratio stands at 18.9, whereas the S&P 500 is at 20.5. Coherent's growth metrics have also been strong. Coherent's Revenues have increased at an average rate of 22.1% over the past three years, while rising 21.7% from $4.6 billion to $5.6 billion in the previous 12 months. However, concerns regarding profitability remain.
Coherent's Operating Income over the last four quarters amounted to $467 million, indicating a disappointing Operating Margin of 8.4% (compared to 13.2% for the S&P 500). Coherent's Operating Cash Flow (OCF) during this period reached $666 million, resulting in a poor OCF Margin of 11.9% (compared to 14.9% for the S&P 500). Nevertheless, margins are expected to improve as high-margin products like AI-related data communication transceivers and advanced industrial lasers see increased demand. Adjusted gross margins have risen to 38.5% over the last quarter, reflecting an increase of around 490 basis points year-over-year, with the company aiming for 40% margins in the near future.
This, in tandem with a higher revenue base, could enhance operating margins as well. There are additional positive aspects for Coherent. Coherent's industrial laser division may experience greater traction, as the demand for advanced lasers that aid manufacturers in cutting, welding, and shaping materials with high precision grows as industries increasingly embrace automation. The company has a global manufacturing presence spread across approximately 60 locations in 14 countries, with about half of its manufacturing sites situated in the U.S. This should protect it from potential tariffs on imported semiconductors imposed by the Trump administration, unlike many fabless companies that depend on imports.
While there may be potential for COHR stock to rise, the Trefis Reinforced Value (RV) Portfolio has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices), delivering strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks has provided a flexible approach to capitalize on favorable market conditions while minimizing losses when markets decline, as elaborated in RV Portfolio performance metrics.
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See price at NarwalSee price at Amazon Positives Reliable, powerful vacuuming Reliable, powerful vacuuming Great mopping capabilities Great mopping capabilities Impressive hair anti-tangle rollers Impressive hair anti-tangle rollers Precision navigation Precision navigation Reliable mapping and navigation Reliable mapping and navigation Self-cleaning and drying multi-function base station Cons Consume water very quickly Consume water very quickly Doesn't play nicely with doors sometimes Follow
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This story was originally published on Social Media Today. To receive daily news and insights, subscribe to our free daily Social Media Today newsletter. TikTok's added a new AI-generated sticker option, which enables you to combine your avatar with an emoji to come up with unique combinations. As you can see in this example, posted by Jonah Manzano, the new option enables you to combine your avatar, which you can also create in the app, with a selection of emojis. You can then use that combined sticker in the app: Which is an interesting application within TikTok's broader integration of AI tools, and with parent company ByteDance investing billions into AI development, you can bet that more and more AI options will be coming to the app very soon. As they are in all apps, but TikTok's plans on this front are less known, because it's primarily focused on China, and building AI tools for the local version of the app, called Douyin. But if you ever want to get an idea of where TikTok is headed, you can look to Douyin. The app reportedly has over 766 million active users, and has become a key social and entertainment platform among Chinese users. And in terms of AI features, that TikTok doesn't have (at least not to the same degree) Douyin has the following: The app composer now includes various AI editing tools, including creative effects, image generation, and more. It also has a text-to-video tool, which enables the creation of short clips in-stream (it also has a separate app called 'Jimeng' for this) There are also various AI assistants in the app, with the latest addition being a chatbot that connects to ByteDance's ChatGPT-like Doubao There's also a Yelp-like AI assistant that recommends restaurants and provides food reviews These are some of the AI elements that are not available on TikTok as yet, which shines a light on the options that could be coming to TikTok soon, building out its AI capacity. In addition, Douyin's also developing improved live-stream avatars which are designed to mimic creators' personalities and habits. TikTok has a form of AI avatars already, but this new wave of AI bots will be more customized and aligned to each creator, enabling influencers to stream to their audience 24/7, Douyin says. At the same time, Douyin is also much more focused on shopping, and has become a leading player in Chinese eCommerce. It's also expanded into food delivery, which is another area that TikTok may look to as it seeks to build out its own shopping elements. On that front, Douyin recently began testing 'Douyin Hourly Delivery,' which will use location services to ensure rapid deliveries to consumers. So, again, this gives you some idea of the AI integrations that are likely coming to TikTok, and the other avenues that it could take to drive more AI usage, while also building out its existing functionality. So on a broader scale, AI-generated emoji stickers are only a small thing, but they add another tool to the platform's expanding AI capacity, which is set to become even more significant over time. Which also means more AI slop, but that's probably inevitable either way. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
