Can Coherent's SiC Leadership Drive the Next Wave of EV Growth?

The EV Surge Is Real, and Coherent Laser Technology Sits at the Center

The electric vehicle revolution isn’t slowing down. With the global EV market projected to grow at 32.5% CAGR through 2030, manufacturers are scrambling to secure critical supply chains. Enter Coherent Corp. (COHR), whose Silicon Carbide (SiC) substrates and coherent laser technology have become indispensable for battery manufacturing and power electronics in EVs.

Here’s why this matters: SiC materials drive energy efficiency in EV powertrains, while Coherent’s high-power laser systems are essential for battery cell production. The company didn’t just sit on the sidelines—it moved fast. In late 2023, COHR locked in $1 billion in strategic investments from Denso Corporation and Mitsubishi Electric Corporation, two automotive giants. Both secured minority stakes in the SiC division and inked supply agreements for 150mm and 200mm substrates and epitaxial wafers.

This wasn’t charity—it was smart capital deployment. The injection boosted Coherent’s free cash flow and operational flexibility, positioning the company as the go-to SiC supplier while hedging investment risk on the balance sheet.

Financial Momentum Backs the EV Play

The numbers tell a compelling story. In Q1 fiscal 2026, COHR posted 17% year-over-year revenue growth alongside a 249 basis point gross margin expansion. That followed fiscal 2025’s even more impressive 23% YoY revenue rise and 400 bps margin gain, fueled by AI datacenter demand and telecom infrastructure buildout.

Stronger profitability means COHR can fund SiC R&D aggressively—a critical advantage in a technology race where coherent laser advancements could unlock next-generation battery architectures.

Valuation Tells an Interesting Story

COHR trades at a 12-month forward P/E of 29.58X, below the broader industry average of 25.22X. Comparing peers: Applied Materials sits at 26.19X (cheaper), while Cognex trades at 34.13X (pricier). Over the past 12 months, COHR stock surged 58.5%, crushing the industry’s 11.8% gain and outpacing Applied Materials’ 39% climb, though beating Cognex’s 4.7% decline.

The Zacks Consensus Estimate has raised COHR’s fiscal 2026 and 2027 earnings by 9.6% and 3.9% respectively over the last 60 days—a signal that Street analysts see runway ahead.

The Competition Isn’t Sleeping

Cognex and Applied Materials both command strongholds in battery process equipment, which could pressure Coherent’s margins and market share. The EV supply chain is becoming a battleground, not a free-for-all. COHR must balance R&D investment with profitability—one misstep could undermine the growth story.

The Bottom Line

Coherent’s positioning in SiC substrates and coherent laser technology gives it first-mover advantage in an EV market that’s just getting started. With $1 billion in fresh capital from blue-chip automotive suppliers and strong financial momentum, the company has the war chest to defend its turf. But execution matters, and competitive pressure is real.