Leading optical module player Coherent Corp has delivered a commendable performance, validating its market valuations.

On the evening of January 30, Coherent Corp unveiled its 2025 annual performance forecast, projecting a net profit range of 9.8 to 11.8 billion yuan for the year. This represents a significant year-on-year surge of 89.50% to 128.17%, compared to the 5.171 billion yuan net profit recorded in the same period the previous year. The non-recurring net profit is anticipated to fall between 9.7 and 11.7 billion yuan, marking a year-on-year increase of 91.38% to 130.84% from last year's 5.068 billion yuan.

In terms of overall growth, while revenue growth in 2025 has somewhat decelerated following the explosive expansion in 2024, net profit growth remains robust.

Given the 7.132 billion yuan net profit reported in the first three quarters of 2025, the fourth-quarter net profit is projected to hit a new high, ranging from approximately 2.668 billion yuan (based on the lowest projection) to around 4.668 billion yuan (based on the highest projection).

This stellar performance is reflected in Coherent Corp's stock price, which continued its upward trajectory in 2026, surging by over 6% intra-year and propelling its total market capitalization past the 700 billion yuan threshold.

Coherent Corp attributed its remarkable performance to several factors:

The company has witnessed a surge in product shipments, driven by robust investment in computing power infrastructure by end clients, with a growing proportion of high-speed optical modules. Coupled with ongoing product solution optimization and enhanced operational efficiency, the company's revenue and net profit have witnessed substantial growth compared to the same period last year. Additionally, investment gains and fair value changes have contributed to an approximate 296 million yuan increase in net profit attributable to shareholders of listed companies.

However, several factors have also exerted downward pressure on the company's net profit for this quarter, including:

1. Exchange losses stemming from the continuous decline in the US dollar exchange rate, resulting in a roughly 270 million yuan reduction in net profit attributable to shareholders of listed companies.
2. Provisions for inventory impairment due to potentially obsolete inventory at subsidiaries, as well as credit impairment losses on accounts receivable with anticipated bad debt risks, collectively reducing net profit attributable to shareholders of listed companies by approximately 113 million yuan.
3. Recognition of share-based payment expenses for restricted stock incentive plans, employee stock ownership plans, and other matters, leading to a roughly 223 million yuan reduction in net profit attributable to shareholders of listed companies.

From the current trajectory of global AI development, capital expenditures by leading internet companies are escalating annually. Notably, super-leading firms like Amazon, Microsoft, Google, and Meta have reported annual capital expenditures reaching hundreds of billions of US dollars, with plans to further increase these expenditures in 2026.

There has been a recent surge in demand for inference and training computing power overseas, prompting price hikes by both Amazon Web Services and Google Cloud. Meta and Microsoft have explicitly stated in their latest financial reports that the tight supply of AI computing power will persist throughout 2026.

CITIC Securities released a research report stating that while the large-scale commercialization of AI applications remains somewhat elusive at present, looking ahead 3 to 6 months, with the intensive catalysis of AI application deployments on the inference side, superimposed with continuous iteration of training-side models, demand for computing power is expected to continue its upward trajectory. Once computing power demand is confirmed during the US earnings season, concerns over the 'computing power bubble' that have previously dampened sentiment and valuations in the computing power sector are anticipated to be temporarily alleviated, potentially sparking a new round of growth in the computing power industry chain.

Therefore, from this vantage point, demand for computing power in the AI market is poised for sustained growth, implying continued performance expansion for leading optical module players like Coherent Corp and YOFC.

According to the latest report by CignalAI, propelled by AI-driven data center and transport network construction, the revenue of the data communication optical module market is expected to surpass 18 billion US dollars in 2025, with coherent optical module revenue nearing 6 billion US dollars. By 2029, the market size for 400G and above data communication optical modules is projected to approach 30 billion US dollars.

Kan Jian Finance believes that with the accelerated pace of global AI iteration, market demand for computing power and energy will continue its upward trajectory.

This also suggests that market demand for computing power will remain elevated in the coming years. For leading optical module companies like Coherent Corp and YOFC, performance is expected to continue its upward momentum in the years ahead, with a relatively low likelihood of a short-term performance inflection point.