Optics Stocks Split as Coherent and Cisco Fall Amid Margins Concerns

The optics industry has seen a stark division in stock performance after earnings reports from Coherent and Cisco. Both companies beat estimates, but their shares plummeted due to concerns over cash flow and margins.

Coherent reported revenue of $2.05 billion, up 33.74% year-over-year, with non-GAAP EPS of $1.74 against a consensus of $1.61. However, the company's operating cash flow fell by 87.45% to $79.5 million, while capital expenditures rose by 150.18%. Cisco also beat estimates, reporting $17.25 billion in revenue, up 17.6% year-over-year, but its non-GAAP gross margin dropped to 66.3% due to higher AI hardware volume and memory cost inflation.

On the other hand, pure-play optical vendors Ciena and Nokia saw significant gains after their earnings calls confirmed explosive data center interconnect demand. Ciena's revenue grew by 39.51%, with cloud provider revenue accounting for 46% of total revenue, growing 70% year-over-year. Nokia's AI and Cloud revenue more than doubled year-over-year, with $3.2 billion in AI and Cloud order intake.