Coherent Corp. 's COHR stock price has skyrocketed over the past year. The stock has gained 37.3% compared with the industry's 31.2% rise and the 9.2% gain of the Zacks S&P 500 Composite.

COHR’s industry peers, Crane NXT, Co. CXT and Jamf JAMF have declined over the past year. Shares of CXT and JAMF have lost 7.91% and 33.6%, respectively, in the same time frame.

One-Year Price Performance

Image Source: Zacks Investment Research

Coherent has outperformed Crane NXT, Jamf, and the industry in the past month. COHR has gained 38.5%, outpacing its industry’s 22.3% rise. Crane NXT and Jamf have increased 21.4% and 6.6%, respectively.

One-Month Price Performance

Image Source: Zacks Investment Research

The significant rise in COHR stock is appealing to investors. The question of whether they should ride the rally or exit their position needs to be answered. Let’s analyze this further to arrive at a conclusion.

Geopolitical Risks and Potential Tariffs Pose Threat to COHR

Coherent is a global company and relies on international supply chains for materials and manufacturing. The lingering geopolitical risk, mainly the tension between the United States and China, could hurt supply chains for materials and manufacturing. The uncertainty prevailing over potential tariffs imposed by either the United States or China could increase COHR’s cost of goods, making it more expensive to manufacture their products.

Hindrances in the supply chain, such as geopolitical risk or tariffs, could be detrimental to Coherent’s ability to procure the necessary components for product manufacturing. This will ultimately result in a reduction of COHR’s capacity to meet consumer demand. We also anticipate that geopolitical uncertainties will affect overall business sentiment, leading to cautious investment behavior from customers and hampering international trade.

The AI leadership battle between the United States and China could introduce technological barricades, disrupting the flow of technology and components required to run Coherent’s business. Management does recognize the apprehensions arising from potential tariff wars as factors that could undermine their optimistic outlook on demand.

Spending Delays by Hyperscalers Could Affect COHR’s Top Line

In the third quarter of fiscal 2025, Coherent registered 24% year-over-year growth in its top line. Robust demand for AI-related data center products fueled this growth. A substantial portion of the company’s datacom segment’s revenues is tied to investments made by hyperscalers. These companies need Coherent’s high-speed optical transceivers to facilitate efficient and swift data transmission for complex AI workloads. Investments made by hyperscalers might not follow a linear progression. Also, the timing of these investments and when COHR recognizes revenues from them can be distorted.