Core Insights - Coherent Corp. (COHR) demonstrates strong financial performance driven by demand from AI-related datacenters and communications, while Richtech Robotics Inc. (RR) is transitioning to a Robotics-as-a-Service (RaaS) model, impacting its revenue negatively in the short term [1][16][17]. Coherent Corp. (COHR) - COHR reported a 17.3% year-over-year revenue increase and a 3.4% sequential growth in Q1 fiscal 2026, attributed to robust demand in AI and communications sectors [2]. - The company achieved a remarkable 244.5% year-over-year increase in operating income, showcasing effective expense management [2]. - A 40-basis-point decline in R&D expenses as a percentage of revenue indicates COHR's operational efficiency and scalability [3]. - The adoption of 800G and 1.6T transceivers reflects strong product demand, with expectations for continued growth in 2026 [4]. - COHR maintains a solid balance sheet with $875 million in cash reserves and a current debt of $48 million, resulting in a current ratio of 2.33, significantly above the industry average [5]. - The Zacks Consensus Estimate for COHR's fiscal 2026 sales is $6.7 billion, indicating a 15.1% year-over-year growth, with an EPS estimate of $5.1, suggesting a 44.5% increase [11][12]. Richtech Robotics Inc. (RR) - RR's revenue for Q3 fiscal 2025 was $1.2 million, an 18.4% decline from the previous year, as the company shifts to a RaaS model [6]. - Despite the revenue drop, RR achieved a gross margin of 74.4%, up 420 basis points year-over-year, indicating effective cost management [6]. - The company's product strategy, including offerings like ADAM and Titan 440, is crucial for capturing the RaaS market, which is projected to grow at a CAGR of 17.1% through 2034 [7]. - RR holds $86 million in cash with no current debt, resulting in a current ratio of 120.2, indicating strong liquidity [8]. - The Zacks Consensus Estimate for RR's fiscal 2025 sales is $5 million, suggesting an 18.2% year-over-year increase, with a projected loss per share of 15 cents [13]. - RR's net loss in Q3 fiscal 2025 was $4.1 million, compared to a loss of $1.3 million in the previous year, primarily due to a 254.7% increase in general and administrative expenses [9][10]. Valuation Comparison - COHR is trading at a forward price-to-sales multiple of 4.2, above its 3-month median of 3.2, while RR's multiple is significantly higher at 39.65, compared to its median of 44.91 [14]. - Despite both companies being fundamentally strong, COHR is viewed as offering more growth potential due to its lower valuation compared to RR [18].

Core Insights - Coherent Corp (NYSE:COHR) triggered a significant Power Inflow alert, indicating a bullish trend in order flow analytics, which is closely monitored by traders [3][5] Group 1: Power Inflow Signal - At 10:11 AM EST on December 22, COHR triggered a Power Inflow signal at a price of $190.20, following a decline of over 3% in the stock price during the opening hour of trading [4] - After the Power Inflow alert, both retail and institutional trading interest shifted towards buying, leading to an immediate rise in stock price, reaching a post-alert high of $194.47 by 2:45 PM EST [4][8] - The Power Inflow signal is a proprietary indicator developed by TradePulse, highlighting significant shifts in order flow that suggest a high probability of bullish price movement for the rest of the trading day [6] Group 2: Order Flow Analytics - Order flow analytics examine real-time buying and selling trends, analyzing volume, timing, and order size across both retail and institutional traders, providing insights into price behavior and market sentiment [7] - The effectiveness of the Power Inflow signal is demonstrated by the immediate intraday gains following the alert, showcasing the value of order flow analytics in identifying bullish intraday activity and potential stock price reversals [8]

Group 1: Cisco and Arista Networks - Morgan Stanley predicts that Cisco Systems (CSCO.US) and Arista Networks (ANET.US) will perform well in 2026 due to the ongoing construction of AI infrastructure and the expansion of Ethernet technology market share [1] - Cisco's stock price is expected to rise driven by opportunities from sovereign nations and optical business, with a target price increase from $82 to $91 [3] - Arista's market sentiment has become particularly pessimistic, but opportunities may become clearer following the release of Q1 earnings and the initiation of first deployments, potentially reversing the negative outlook [3] Group 2: Motorola Solutions - Motorola Solutions (MSI) has seen a 20% decline in stock price this year, attributed to concerns over a government shutdown, which lasted 43 days [4] - Morgan Stanley upgraded Motorola's rating from "hold" to "overweight," despite a slight target price decrease from $471 to $436, viewing the sell-off as excessive and identifying an attractive entry point [4] Group 3: Other Companies in Optical Devices - Morgan Stanley expects Corning (GLW.US), Ciena (CIEN.US), Lumentum Holdings (LITE.US), and Coherent (COHR.US) to outperform the market in 2026, driven by investments in lasers and optical devices [5] - Target prices for these companies have been adjusted: Corning from $82 to $98, Ciena from $195 to $213, Lumentum from $190 to $304, and Coherent from $150 to $180 [6]

Market Overview - The market has experienced a pullback in the tech sector, which is viewed as an opportunity to reload investments [3][6] - There is a focus on light trading volume and attendance expected in the coming weeks due to the holiday season [2] Technology Sector Insights - Networking equipment is anticipated to see growth as data centers shift from scaling out to scaling up, requiring more networking equipment [4][5] - Arista Networks is highlighted as a key player with significant upside potential, particularly in AI switching equipment, with the Ethernet switch market projected to grow from $8 billion to approximately $59 billion in four years [6] - Arista has a strong backlog of deferred revenue amounting to $2.5 billion expected to contribute to earnings as early as Q2 of next year [7] AI and Cloud Computing - The AI sector is facing uncertainty regarding funding for ambitious projects, which is raising risk premiums on AI-related stocks [15][16] - Companies like Oracle and Coreweave are mentioned as part of the AI landscape, with OpenAI seeking substantial funding to enhance its valuation [14] - The majority of AI capital expenditures are being funded with cash, contrasting with legacy hyperscalers that have more financial flexibility [15] Pharmaceutical Sector - The pharmaceutical industry is gaining attention as political hurdles have been cleared, making it attractive for generalist portfolio managers [13] - Eli Lilly is identified as a strong pick due to its dominance in the anti-obesity market and promising oncology pipeline [13] Economic Outlook - There is optimism regarding nominal GDP growth, which is positively correlated with earnings growth, suggesting a bullish outlook for the market [10][18] - Concerns about potential overheating in the economy leading to rate hikes by the Fed are not expected in the near term [19]

Core Insights - Corporate demand for business services is evolving and accelerating, viewed as strategic enablers of growth and efficiency [1] - Service providers embedding technology are becoming essential partners for enterprises navigating complex environments [2] - The essential nature of services like payroll and AI-driven tools creates sticky relationships and recurring revenues [3] Company Highlights - **Dave**: Achieved over 60% year-over-year revenue growth in Q3 2025, with adjusted EBITDA more than doubling for four consecutive quarters, reflecting scalability [5][6] - **Coherent**: Reported $1.58 billion in revenues with a 19% year-over-year pro forma growth, driven by AI-related data center demand [10][12] - **GigaCloud**: Total revenues increased by 10% year-over-year, with a strong operating cash flow of $78 million, supported by a diversified business model [13] - **LiveRamp**: Surpassed revenue guidance with strong adoption of its Data Collaboration Network, indicating increasing demand for data collaboration services [16][18] Future Outlook - Dave is projected to achieve revenues of $544 - $547 million for the full year 2025, indicating a 57.3% year-over-year growth [7] - Coherent is expected to see around 15% year-over-year revenue growth in fiscal 2026, benefiting from sustained corporate technology spending [12] - GigaCloud anticipates around 9% year-over-year revenue growth in 2025, driven by its channel-agnostic marketplace model [15] - LiveRamp expects around 9% year-over-year revenue growth in fiscal 2026, as demand for data collaboration intensifies [18] Investment Considerations - Each highlighted company addresses critical corporate needs, suggesting they are well-positioned to benefit from structural shifts in business operations [20]

Industry Overview - Artificial intelligence is entering a new phase of infrastructure expansion, with photonics as a key technology enabling this growth [1] - Optical interconnects, silicon photonics, and co-packaged optics are essential for boosting bandwidth, reducing latency, and lowering power consumption in next-generation data centers [2] - The market for optical interconnects is projected to grow from approximately $16 billion in 2024 to between $34 billion and $41 billion by 2030 [3] Company Insights - Lumentum manufactures critical optical components for AI data centers and has seen accelerating sales and earnings growth, earning a Zacks Rank 1 (Strong Buy) [7][8] - Coherent Corp produces lasers and optical components for AI data centers and has a Zacks Rank 1, with strong sales and earnings momentum [10][11] - Fabrinet specializes in the assembly of optical and photonic components and has a Zacks Rank 2 (Buy), benefiting from rising demand for high-speed optical modules [14][16] Financial Performance - Lumentum's revenue is projected to climb 56% this year and 31.4% next year, with earnings expected to surge 163% year over year [9] - Coherent Corp's sales are expected to grow 15.1% this year and 14.5% next year, with earnings projected to rise 44.5% and 24.6% over the same periods [11] - Fabrinet's sales are expected to increase 28.5% this year and 16.9% next year, with earnings projected to grow 30.7% and 16.1% over the same periods [17] Market Trends - Investors are beginning to rotate into the photonics industry, with strong performance observed in stocks related to this sector [5] - The shift towards optical technologies in AI infrastructure is gaining attention, indicating a potential multi-year demand tailwind for companies like Lumentum, Coherent, and Fabrinet [20][21]

Market Overview - The U.S. stock markets ended the week mostly lower, with the Nasdaq Composite and S&P 500 slipping by 1.49% and 0.28% respectively due to a sharp selloff in tech stocks [1] - The Dow Jones Industrial Average gained 1.51% as investors rotated toward value and traditional sectors [1] Federal Reserve Actions - The Federal Reserve cut its key overnight borrowing rate by a quarter-percentage-point, now in the range of 3.5% to 3.75% [2] - This decision was influenced by signs of gradually cooling inflation, aimed at supporting the labor market and stimulating economic growth [2] - The number of Americans filing new applications for unemployment benefits surged to a 4.5-year high of 236,000, indicating a sharp deterioration in the jobs market [2] Stock Performance and Recommendations - Liquidia Corporation (LQDA) shares gained 43.9% since being upgraded to Zacks Rank 2 (Buy) on October 13, outperforming the S&P 500's 4.4% increase [3][6] - The Bank of N.T. Butterfield & Son Limited (NTB) returned 22.7% since its upgrade to Zacks Rank 1 (Strong Buy) on October 7, compared to the S&P 500's 1.5% increase [4] - Western Digital Corporation (WDC) shares advanced 52.8% since its upgrade to Outperform on October 13, significantly beating the S&P 500's 4.4% increase [7] Portfolio Performance - A hypothetical portfolio of Zacks Rank 1 stocks returned +14.3% in 2025, slightly underperforming the S&P 500 index's +14.9% [11] - The Zacks Model Portfolio has outperformed the S&P index by more than 12 percentage points since 1988, with an annualized average return of +23.9% compared to +11.5% for the S&P 500 index [14] Sector-Specific Stocks - Cencora, Inc. (COR) and Fair Isaac Corporation (FICO) returned 18.7% and 18.6% respectively over the past 12 weeks [15] - Johnson & Johnson (JNJ) returned 19.3% over the past 12 weeks, benefiting from investor demand for quality dividend stocks [19]

Group 1 - Tech stocks are experiencing significant declines, with the Nasdaq down more than 1% and set to finish the week with losses [1] - Astera Labs, involved in AI infrastructure, saw its stock drop by 4.36% within a 15-minute timeframe [1] - Amphenol, a manufacturer of fiber-optic cables and connectors, reported a decline of 2.1% during the same period [2] - Coherent, another company in the components sector, experienced a 4.17% loss over a similar 15-minute window [2]

Company Overview - Coherent is a $29 billion global leader in laser technologies and photonics, serving industrial, communications, electronics, and instrumentation markets [1] - The company has seen explosive growth in demand for its optical solutions due to the AI/datacenter buildout [1] Financial Performance - Revenues are projected to double from $3.3 billion in June 2022 to $6.7 billion by June 2026, with a stock appreciation of 290% during the same period [1] - Profits are expected to increase by 42% this fiscal year, surpassing $5 EPS, with a current year EPS consensus raised by 9.6% following a strong performance in the September quarter [2] Strategic Partnerships - A significant driver of investor enthusiasm has been Coherent's collaboration with NVIDIA to develop silicon photonics networking switches using co-packaged optics [3] - This partnership aims to enhance connectivity in AI factories, allowing for the connection of millions of GPUs [3][4] Product Innovations - Coherent supplies the laser technology for Apple's Face ID, continuing a multiyear strategic supply agreement to produce vertical-cavity surface-emitting lasers (VCSELs) [7][8] - The company is expanding its manufacturing capabilities at its Sherman, Texas facility, which is equipped for next-generation optoelectronic applications [9] Business Divestitures - Coherent is selling its Aerospace & Defense business to private equity firm Advent for $400 million, allowing the company to focus on its core technologies [7][9]

Core Insights - Coherent Corp. is recognized as a significant player in the AI sector, with Raymond James raising its price target from $180.00 to $210.00 while maintaining a "Strong Buy" rating, indicating optimism about the company's AI exposure driving future growth [1][2] Company Overview - Coherent Corp. is an American manufacturer specializing in optical materials and semiconductors, positioning itself as a leader in enabling various AI architectures across data centers [2][3] Market Position and Analyst Sentiment - Analysts believe that the value of Coherent's technology and intellectual property is not fully recognized, suggesting that there is potential for further appreciation in the stock's value [2] - The industrial segments have shown signs of recovery, supported by recent strategic actions taken by the company, which bodes well for future performance [2] Investment Considerations - While Coherent is seen as a promising investment, some analysts suggest that other AI stocks may present greater upside potential with less associated risk [3]