Nvidia Pledges $2B to Coherent as Company Cuts Debt to $3.2B
Nvidia announced a $2 billion investment in Coherent to secure optical components for AI infrastructure, reinforcing demand and driving COHR shares up 37.5% YTD and 250% over 12 months. Coherent has cut long-term debt from $4.2 billion to $3.2 billion, lowering leverage to 1.7X and holding $899 million cash.
1. Nvidia’s $2 Billion Investment
Nvidia has committed $2 billion in equity and multi-billion-dollar purchase agreements to Coherent, aiming to secure advanced silicon photonics and optical interconnects for next-generation AI data centers. This strategic backing underscores Nvidia’s focus on overcoming copper interconnect limits at high data rates by integrating Coherent’s optical technologies.
2. Stock Performance
Coherent shares have surged approximately 37.5% year-to-date and about 250% over the past 12 months, reflecting investor enthusiasm over the Nvidia partnership and the company’s positioning in the AI infrastructure supply chain.
3. Deleveraging Initiatives
Coherent reduced long-term debt from $4.2 billion in 2023 to $3.2 billion by end-2025, driven by a $400 million aerospace and defense sale and the divestiture of its materials-processing tools unit. These actions cut the leverage ratio to 1.7X and bolstered a cash balance of $899 million.
4. AI Production Expansion
With a strengthened balance sheet, Coherent is scaling its indium phosphide production to ramp 1.6 terabit transceiver capacity, supporting a datacenter book-to-bill ratio above 4X and positioning the company for sustained growth in high-speed optical components.