How Coherent Can Earn Investor Confidence
Bridging The Gap Between Market Skepticism And Industry Reality, And What To Watch For Next.
Coherent’s Q4FY26 earnings call is likely the first time “Substack” has been explicitly mentioned on a significant financial reporting event.
Michael Genovese, Senior Research Analyst, Rosenblatt Securities
It is really good to see the expectation for CPO laser revenues in the fiscal second quarter, because that would imply that you are either qualified or have line of sight to qualification and would kind of go against some of the fuzz, I think that is not coming from Wall Street, but more coming from Substack saying you guys are having trouble with that laser. Just any more color on the confidence that you will be ready for the customer to actually recognize revenue in that quarter and just progress that has been made recently.
Most people believe that the “Substack” being referred to here is Irrational Analysis who has been quite vocal about the Coherent’s lack of leadership in UHP lasers for CPO. You can see his recent earnings commentary here with a strong challenge to Coherent to present their laser data to prove to Wall Street that they are a viable InP laser alternative to Lumentum.
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This signals that Wall Street is becoming increasingly entrenched in industry commentary on Substack (this publication included). Earnings calls are no longer just financial numbers and promises. They are becoming events where company leadership needs to start bringing receipts to their claims, or risk getting called out on it by analysts who are increasingly technically savvy. These kinds of questions on earnings calls are only going to increase.
I have argued in the past that the know-how of building UHP lasers has existed for a long time, in the deep-dive articles below. These articles walk through step by step on how to design a UHP laser, and the information broadly exists for decades in the public domain.
Lasers for CPO/NPO: Part 1 – The InP DFB Laser
There is a lot of FUD in the market about ultra high power (UHP) lasers for CPO and who the leading provider is in this segment. Everybody I’ve asked about UHP lasers unequivocally says Lumentum is in the lead, but few are able to discuss the engineering challenges in making UHP lasers, where the Lumentum advantage lies (if it even exists), and what the real alligator-filled moat is that keeps competitors out.
Lasers for CPO/NPO: Part 2 – Lumentum’s Technology and Moat
In this series on UHP lasers for CPO/NPO, our purpose is to carefully dissect the technology to understand how it works, where the engineering difficulty lies, what architectural options exist, and deeply understand where the technology differentiation and moat actually lies for key industry players. If you want to understand why these external lasers are needed, see this earlier post.
Sure, there are refinements to the laser design that adds up over time to create performance advantages, but fundamentally, the challenge lies in making these devices at scale. There are too many things that can go wrong when hundreds of milliwatts are output from a laser. Knowing how to do this at scale is the real competitive moat.
From a pure performance perspective, does Coherent have a “good enough” CPO laser that will work? Their UHP laser specs match Lumentum’s at least on their website. Even if they don’t have the absolute best laser, can they build one that works reliably, at high volumes, while being on time?
I do believe Coherent can take some steps to build investor confidence going forward. If they would like to stop people from making guesses, then some technical data needs to be published sooner rather than later.
Showing Linewidth Data to Investors
To the first order, a lot of doubt can be alleviated if Coherent simply showed linewidth data. If a sub-500 kHz linewidth laser is what is being advertised, then that data should be easy to show. But that data point has been noticeably absent. Publishing linewidth, relative intensity noise, and mode-stability over a range of temperatures and electrical conditions should silence critics quite easily. There is no need to even publish the latest iteration of the laser, but show a “good enough” laser from a few years ago that is in the ballpark. This protects any strategic advantages going forward.
The danger of this strategy which likely worries Coherent Investor Relations is that anything short of what Lumentum has published would put them squarely at a number two position (possibly lower), and that messaging is not acceptable. In a way, this gives credence to what the critics have been saying all along and could become a dangerous narrative that is highly likely to be misconstrued on Wall Street, or even by technically savvy analysts.
What is even stronger is to actually have ELSFP modules at a conference like Lumentum did in ECOC 2025. See this short video, and notice how it includes a power meter showing nearly 24.5 dBm of power output, along with a spectrum analyzer showing the laser linewidth.
Coherent had a demo at ECOC 2025 too, but they only had a power meter and no spectrum measurements. The power reading was >24 dB alright, but that is a scalar measurement. A spectrum measurement of the laser output usually reveals a lot more – like linewidth and side-mode suppression ratio (SMSR).
This approach is even better than a published paper because critics can see the hardware working in real time and know that it is not a one-off result in a company’s lab environment. Several conference attendees will press the exhibitor on the show floor with questions, and then write on Substack and social media about it. Independent reports analyzing what they say serves as “proof-that-it-works” and builds investor confidence.
The only live demo of CPO with ELSFP was shown at OFC 2026. These numbers from the demo characterize the whole transmit chain: laser, coupling, split ratio, modulator, and driver, The laser-specific merits are either confounded or invisible. To judge the laser itself you need fiber-coupled power per port, wall-plug efficiency, RIN in dB/Hz, SMSR, temperature range, and reliability data.
The industry will be closely watching ECOC 2026 and OCP Global Summit for any information on this front.
The Counterargument
While laser measurements would be helpful, should Coherent really cave to the pressures of Wall Street or the blooming cottage industry of Substack industry analysts? From my own years of experience working within the semiconductor industry, it is common for companies to choose to not publish, or send representatives to conferences for fear of information leaks. Does lack of information necessarily mean that a product line is uncompetitive?
Broadcom has their Remote Laser Modules (RLMs) that they use for their CPO line of products. From what I can tell, I don’t see any published measurements of laser specs from them either. If you know how RLMs from Broadcom compare to Lumentum’s UHP lasers, please do let me know. But oddly enough, nobody questions Broadcom regarding their UHP laser capabilities.
This leads us to ask: is Coherent being held to an unfair standard? Should they publish data just because their competitor did? Nvidia invested $2B each into Lumentum and Coherent for their laser supply. I would assume basic due diligence by the highly competent optical networking experts at Nvidia (particularly the group from their Mellanox acquisition) would have revealed if there were fundamental flaws with their laser technology.
Ultimately what matters is whether they have a laser that works for CPO. In a highly supply constrained laser market, having a highly reliable product, with high yield, and competitive specs would make them as important a player as any in the high power laser market.
What to Watch For
In the absence of laser measurements, there are some industry signals that investors should watch for in the next 12-15 months, to understand where Coherent is headed.
