Coherent (NYSE:COHR | COHR Price Prediction) CEO Jim Anderson did not mince words when describing what the new NVIDIA supply agreement actually means for his company. In a recent Mad Money interview, he laid it out:
“The long term supply agreement with NVIDIA, it stretches out to the end of the decade. It’s multiple products and it’s multibillion dollar. And so that is a step function expansion in our partnership with NVIDIA.”
“Step function expansion” is doing a lot of work in that sentence. This is not an incremental contract renewal. This is a structural shift in how deeply Coherent is embedded in the AI infrastructure supply chain, locked in with the most important chip company on the planet through the end of the decade.
What NVIDIA Is Actually Buying
The deal is centered on silicon photonics and optical interconnects, the technology that moves data between AI chips at the speeds modern training clusters demand. NVIDIA invested $2 billion into Coherent as part of a broader push into advanced optical technologies, with the purchase agreement covering multiple product lines across several years.
NVIDIA CEO Jensen Huang framed the partnership as an effort to “pioneer next-generation silicon photonics for AI infrastructure, emphasizing speed and energy efficiency.” That is not supplier language. That is co-development language.
The Numbers Behind the Story
Coherent’s most recent quarter gives the partnership real financial context. Q2 fiscal 2026 revenue came in at $1.69 billion, up 17.49% year-over-year, beating estimates by 2.74%. The engine driving that growth is exactly the business NVIDIA is now anchoring itself to: the Datacenter & Communications segment hit $1.208 billion, up 34% year-over-year, representing 72% of total revenue.
The demand signal is even stronger than the revenue number suggests. Coherent’s data center book-to-bill ratio exceeded 4.0x last quarter, meaning the company has four times more orders booked than it shipped. That backlog now has a multibillion-dollar anchor tenant.
Anderson has been consistent about where this goes: “We expect continued strong growth in the second-half of fiscal 2026 and throughout fiscal 2027 based on strong datacenter and communications demand and our continued production capacity expansion.”
Why This Validates the Whole Thesis
Coherent is also being added to the S&P 500, effective March 23, 2026, a milestone that reflects how dramatically the company’s profile has changed. The stock is up 41.21% year-to-date and 314.97% over the past year.
The NVIDIA deal is the clearest signal yet that Coherent is not just riding the AI wave. It is the optical plumbing that AI infrastructure runs through, and now the most important buyer in that market has signed a contract saying so through the end of the decade.
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