After a powerful start to 2026, optical-networking stocks have stalled out in June, and J.P. Morgan analysts see that weakness as a buying opportunity.
Both Coherent (COHR) and Lumentum (LITE) have fallen more than 15% from their early-June peaks, following triple-digit gains earlier in the year.
J.P. Morgan reiterated Overweight ratings on both stocks, maintaining a price target of $380 for Coherent and $1,130 for Lumentum.
The recent selloff has been tied in part to investor concerns about delays in co-packaged optics, a worry J.P. Morgan now believes is overblown.
Feedback gathered from investors at the Computex exhibition suggested Nvidia’s optics ramp is actually tracking ahead of schedule, not behind it.
That data point removes one of the central justifications for the recent price decline, strengthening the bull case for both names heading into the second half of 2026.
Analyst Chatterjee noted that Nvidia likely accounts for the majority of existing revenue outlooks for both Coherent and Lumentum, making that positive read-through especially significant.
Beyond Nvidia, J.P. Morgan flagged that select cloud-service providers and other buyers are beginning to enter the optical-networking market in a meaningful way.
Chatterjee said these new buyers “would be additive to current forecasts,” suggesting that current estimates have not fully priced in this emerging demand.
Both stocks currently trade at approximately 25 times estimated 2028 earnings, despite analysts forecasting annual earnings growth of around 40%, implying the valuations remain attractive on a growth-adjusted basis.
Broad analyst sentiment supports that view, with 81% of more than two dozen firms tracked by FactSet rating Lumentum a Buy and 76% holding a Buy rating on Coherent.
Neither stock has seen major analyst downgrades accompany the recent price decline, reinforcing the idea that the pullback reflects sentiment rather than fundamentals.
Lumentum rose 3.8% on Wednesday before adding another 1.9% in premarket trading Thursday, signaling early signs of a potential recovery.
Coherent edged up 1.2% on Thursday after a modest dip the session prior, with investors appearing to take note of the J.P. Morgan commentary.
For investors who missed the initial surge in optical stocks earlier this year, J.P. Morgan’s note suggests the current dip may represent a second chance at an entry point with strong upside potential.
