Key Highlights

● Coherent fell Friday as traders rotated out of optical networking and AI infrastructure stocks.

● Profit-taking was cited as the driver, and no closing figure was reported.

● All 30 PHLX Semiconductor Index members fell, and the index finished at 11,137.29.

● Meta, Lam Research and Texas Instruments report Oct 21, and the Fed decides Oct 28.

Rotation and profit-taking

Coherent (NYSE:COHR) fell on Friday as traders rotated out of optical networking and AI infrastructure stocks, according to market reports. Profit-taking was cited as the driver, and Coherent was listed among the morning's notable decliners. A closing figure for the stock was not reported in the sources reviewed.

Coherent makes lasers, optical materials and networking components. A key part of its business is supplying optical transceivers, the devices that convert electrical signals to light and back again so data can move at high speed between servers in data centers. That has made the company one of the beneficiaries of the AI build-out, as cloud providers race to connect ever-larger clusters of processors.

Stocks with strong runs tied to AI spending are often the first to be sold when investors decide to lock in gains. On Friday, that pattern played out across the AI supply chain.

Chips extend their losing streak

The semiconductor group had a rough day. The PHLX Semiconductor Index fell to 11,137.29, with all 30 of its members lower, according to market data. Several sources said chip stocks posted an eighth straight decline, though they disagreed on how the streak compares historically.

Advanced Micro Devices (NASDAQ:AMD), Intel (NASDAQ:INTC), Micron (NASDAQ:MU) and Broadcom (NASDAQ:AVGO) all fell, according to market data. Memory names such as Seagate (NASDAQ:STX), Western Digital (NASDAQ:WDC) and Sandisk (NASDAQ:SNDK) tumbled on concerns about Chinese competition. AXT (NASDAQ:AXTI), a maker of materials used in optical and chip components, slumped with no specific catalyst identified, market reports said.

The selling reached beyond chips. CoreWeave (NASDAQ:CRWV) plunged amid concerns about its debt load of more than $50 billion, and Nebius (NASDAQ:NBIS), Applied Digital (NASDAQ:APLD) and DigitalOcean (NYSE:DOCN) also fell sharply. Market commentary said more than $1 trillion was erased from semiconductor and AI-related stocks over the week.

Questions about AI financing

The theme tying the selloff together was financing. Investors moved from asking what AI can do to how it will be paid for, according to market commentary. For suppliers like Coherent, that matters because its sales depend on customers continuing to spend heavily on data-center equipment.

Not everyone saw a change in fundamentals. BofA analysts said deployed AI infrastructure is running close to full utilization and that the risk is "priced in."

The broader market

The NYSE Composite, where Coherent is listed, has no reported closing level for Friday. The S&P 500 fell 84.62 points to 7,659.44, while the Nasdaq Composite dropped 572.99 points to 26,140.03. The Dow Jones Industrial Average slipped 175.28 points to 52,002.41. The Cboe Volatility Index rose 3.53 points to 19.99 after touching its highest level since June 11.

Energy, utilities and consumer staples moved higher as money rotated toward defensive sectors. Brent crude rose to $109.86, its highest level since May 19, lifting oil producers.

Coherent Data-Center Spending Signals

One analyst said "upcoming Big Tech earnings will still need to demonstrate that the enormous investment in AI is translating." The Federal Reserve's next decision, on Oct 28, will also shape the backdrop for AI infrastructure stocks.

For Coherent, attention turns to signals on data-center spending from its largest customers. Meta (NASDAQ:META) reports on Oct 21, and its commentary on capital spending will be closely watched across the optical networking group. Lam Research (NASDAQ:LRCX) and Texas Instruments (NASDAQ:TXN) report the same day, offering further reads on chip demand.