COHR

On March 2, the optics sector experienced a significant surge in stock prices, driven by NVIDIA's $4 billion investment in Coherent and Lumentum. However, this euphoria led to aggressive profit-taking the following day, as investors sold off their shares in Credo Technology, Lumentum, and Applied Optoelectronics. This profit-taking sentiment likely spilled over to Coherent, causing a decline in its stock price.

Despite the bullish sentiment surrounding Coherent's partnership with NVIDIA and its strong growth prospects, the stock's high valuation (55.8 times forward adjusted earnings and 8.09 times sales) has raised concerns among investors. The company's rapid growth in AI-related sales and data center business has been impressive, but the market is now cautious about whether this momentum can be sustained in the long term. The potential slowdown in growth or a correction in the AI sector's valuation could lead to a decline in Coherent's stock price.