Coherent Corp (COHR): The Laser-Sharp Play in EV and Semiconductor Supercycles

In an era where electric vehicles (EVs) and advanced semiconductors are reshaping global industry, few companies sit at the intersection of both secular growth trends. Coherent Corp (NASDAQ: COHR) is one of them. Leveraging precision laser technologies, the company has built a dual-engine growth machine, dominating critical processes in EV battery production and semiconductor lithography. With a moat fortified by proprietary innovations, recurring revenue streams, and margin resilience, Coherent is a rare “defensive growth” stock—ideal for investors seeking exposure to high-demand tech sectors while mitigating cyclical risks.

The EV Battery Play: Lasers as the Unsung Heroes of Energy Storage

Coherent’s leadership in EV manufacturing begins with its fiber laser systems, which are indispensable for battery production. These lasers enable ultra-precise welding of battery cells, modules, and packs with minimal heat distortion—a key factor in boosting safety and longevity. Unlike traditional methods, Coherent’s solutions reduce capital costs and enable flexible parameter adjustments, making them a preferred choice for EV giants like Tesla and BYD.

But Coherent isn’t just a tool supplier. Its DOE-funded lithium-sulfur (Li-S) battery project—targeting 1,000-cycle durability and 50% lower material costs—positions the company as a pioneer in next-gen energy storage. Sulfur’s abundance and lack of reliance on scarce metals like cobalt could make Li-S batteries the backbone of sustainable EV supply chains by 2030. Meanwhile, its SHARP™ recycling technology, recovering 97% of critical metals from spent batteries, adds a circular-economy layer to its EV moat.

Semiconductor Lithography: The 2nm Race and Coherent’s Unmatched Edge

In semiconductors, Coherent is the gatekeeper of extreme ultraviolet (EUV) lithography, a technology essential for chips smaller than 5nm. Its lasers power ASML’s EUV machines—the only tools capable of mass-producing cutting-edge AI chips and 5G components. With an 80% market share in EUV light sources and a 28% stake in the broader lithography market, Coherent’s position is near-monopolistic.

Recent wins include a $120 million contract with TSMC for next-gen EUV systems and breakthroughs in reducing energy consumption by 15%. Even as the broader semiconductor sector faces cyclical headwinds, Coherent’s Q1 2025 results—$450 million in semiconductor revenue (up 12% QoQ)—highlight its decoupling from industry volatility. Analysts note that with no direct competitors in EUV lasers, Coherent’s dominance will only grow as chipmakers race to 2nm and beyond.

Why Coherent is a “Defensive Growth” Gem

1. Recurring Revenue Anchors Stability: Service contracts for laser maintenance and upgrades provide steady cash flow, shielding the company from tech downturns.
2. Margin Resilience: Gross margins of 42% in Q1 2025 (vs. industry averages of 30–35%) reflect high barriers to entry and premium pricing power.
3. R&D-Driven Moats: $85 million in semiconductor R&D and $250 million in total Q1 2025 investments ensure Coherent stays ahead in EUV and Li-S battery tech.

Critics may point to supply chain bottlenecks in rare-earth materials—a valid concern—but Coherent’s aggressive supplier diversification and 40% production capacity expansion by mid-2025 suggest mitigation is underway.

The Investment Case: A Rare Dual-Play Opportunity

Coherent isn’t just a beneficiary of EV and semiconductor trends—it’s an enabler of them. With a 18% stock price surge in Q1 2025 and a valuation still below its peers’, the stock offers asymmetric upside.

• EV Exposure: Li-S batteries and recycling tech will gain traction as automakers prioritize sustainability.
• Semiconductor Supremacy: The 2nm race is just beginning; Coherent’s EUV lasers will remain irreplaceable.
• Dividend + Growth Hybrid: A modest 1.2% dividend yield adds a “defensive” layer to its growth narrative.

Final Take: Buy Now, or Pay Later

Coherent Corp is the kind of stock that thrives in both booms and busts. Its dual moats in EV and semiconductor manufacturing, paired with recurring revenue and margin strength, make it a “portfolio anchor” in volatile markets. With a clear path to $600 million in annual semiconductor revenue and Li-S commercialization on the horizon, investors ignoring COHR risk missing out on one of the most compelling tech stories of the decade.

Action to Take: Initiate a position in COHR at current levels. Target a 12–18 month horizon for 30–40% upside as EV adoption and semiconductor demand accelerate.

Disclosure: This analysis is for informational purposes only. Always conduct your own research or consult a financial advisor before making investment decisions.