J.P. Morgan analyst Samik Chatterjee identified a potential buying opportunity in Coherent (NYSE: COHR) and Lumentum (NASDAQ: LITE) after both optical stocks retreated from highs on co-packaged optics concerns the analyst called overblown.

Key Highlights

  • Coherent (NYSE: COHR) and Lumentum (NASDAQ: LITE) declined approximately 17% and 15% from recent highs on co-packaged optics adoption concerns.
  • P. Morgan analyst Samik Chatterjee characterised the concerns as likely overblown, citing Nvidia's CPO ramp as broadly on track.
  • Both companies hold multi-year, multibillion-dollar supply agreements with Nvidia for advanced laser systems and optical technology.
  • Coherent and Lumentum trade at approximately 25 times 2028 consensus earnings estimates, with Wall Street expecting 40%+ earnings growth in that period.
  • Both near-packaged optics and co-packaged optics adoption pathways require laser components from Coherent and Lumentum, supporting demand regardless of architecture preference.

J.P. Morgan analyst Samik Chatterjee flagged a potential entry opportunity in two leading optical networking component suppliers after both stocks retreated meaningfully from earlier highs. Coherent (NYSE: COHR) and Lumentum (NASDAQ: LITE) declined approximately 17% and 15%, respectively, from peaks reached earlier in June 2026, creating valuations the analyst described as increasingly attractive relative to long-term earnings growth expectations.

The pullback was attributed to investor concern about potential delays in the adoption of co-packaged optics, a technology that integrates optical transceivers and processors in the same package to improve chip speed and power efficiency. Chatterjee assessed these fears as likely excessive given that supply chain discussions indicate Nvidia's co-packaged optics ramp remains broadly on schedule.

A secondary concern in the market centred on near-packaged optics, an alternative architecture that positions optical components close to but not within the processor package. Chatterjee noted that either architecture ultimately requires advanced laser systems from Coherent and Lumentum, meaning the outcome of the CPO versus NPO debate does not materially change demand for either supplier.

Both Coherent and Lumentum formalised multi-year supply agreements with Nvidia earlier in 2026, with the contracts including multibillion-dollar purchase commitments for laser systems and optical networking technology. These agreements provide substantial revenue visibility and de-risk the investment case against near-term adoption timeline uncertainty.

At approximately 25 times consensus 2028 earnings estimates, with earnings growth expectations exceeding 40% in that period, the analyst argued the stocks offer a more favourable risk-reward than their recent elevated valuations suggested. Customer diversification beyond Nvidia into other technology companies exploring optical interconnect solutions adds further upside potential.

For investors tracking best optical networking stocks in 2026, the Coherent and Lumentum thesis rests on the AI data-center build-out driving structural demand for high-performance optical components regardless of which specific interconnect architecture ultimately prevails at scale.

This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial adviser before making investment decisions.