Shipments doubled sequentially yet AI gross margins remain stuck at the corporate average.
Thesis: The market is underpricing the volume. While margins are not expanding yet, the sheer velocity of the 800G ramp ($100M run rate, doubling sequentially) creates a momentum trade that ignores unit economics for now. COHR owns the laser capacity while competitors scramble. The external IC bottleneck is a temporary governor on a rocket ship, not a structural wall.
Verdict: LONG — Conviction: MEDIUM
Catalyst: 1.6T transceiver shipments beginning later this year, widening the technical moat.
Key Risk: External IC constraints (DSPs/Retimers) preventing them from shipping fully assembled units despite having the lasers ready.
The Tell: CFO Richard Martucci admitted AI products are 'at the corporate average' for margin. If they had real pricing power on these scarce components, margins should be accretive, not neutral.
Friction Level: MODERATE_FRICTION — Leverage. Bulls see the VCSEL internal supply as a moat. Bears see the dependence on external DSPs (ICs) as a ceiling they don't control.
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