11 Hidden AI Stocks to Buy Right Now

3. Coherent Corp. (NYSE:COHR)

Number of Hedge Fund Holders: 71

Coherent Corp. (NYSE:COHR) develops, manufactures, and markets engineered materials, optoelectronic components & devices, and optical & laser systems & subsystems. These are used in industrial, communications, electronics, and instrumentation markets worldwide. The company benefits from the demand for AI-related components like optical transceivers, which are required by data centers.

The company made record datacom revenue in FQ2 2025, particularly fueled by the strong adoption of Coherent’s 800G transceivers. This revenue showed an improvement of 79% year-over-year. To further support this growth, indium phosphide production tripled year-over-year. Indium phosphide is a binary semiconductor composed of indium and phosphorus. It’s used in lasers and other optoelectronic devices, used for high-speed data transmission in applications like AI-driven data centers.

On March 24, Raymond James revised its datacom optical model and forecasted $22.2 billion in AI backend transceiver sales by 2030, with a ~30% annual growth rate. Its 2027 estimate for AI backend revenue increased to $7.5 billion from $7.1 billion. Raymond James analyst Simon Leopold also upgraded the stock from Outperform to Strong Buy but lowered the price target to $91 from $110.

Diamond Hill Select Strategy stated the following regarding Coherent Corp. (NYSE:COHR) in its Q4 2024 investor letter:

“Among our other top Q4 contributors were Amazon, WESCO and Coherent Corp. (NYSE:COHR). Coherent is a global leader in materials, networking and lasers for the industrial, communications, electronics and instrumentation markets. Demand for optical transceivers used in AI datacenter buildouts has been robust, benefiting Coherent and resulting in higher earnings and new orders which suggest momentum is likely to continue.”