TD Cowen has begun coverage of two telecom-related technology names that the firm says are positioned to benefit from rising demand for artificial intelligence infrastructure. The research house initiated Buy ratings on both companies, emphasizing their exposure to datacenter connectivity and optical networking technologies.
Below is a closer look at each name and the rationale TD Cowen provided.
Coherent Corp
TD Cowen started coverage of Coherent Corp with a Buy rating and a $330 price target. The firm framed Coherent as a direct beneficiary of accelerating AI infrastructure demand, pointing to adoption cycles for higher-speed optical interfaces - including 800G and 1.6T - as a structural growth tailwind. The analyst note highlighted Coherent’s long track record in photonics research and a diversified business model as positive attributes.
Key elements of TD Cowen’s assessment for Coherent include the company’s integrated transceiver business model and a hybrid approach to laser sourcing, which the firm believes should provide some insulation against risks of capacity overbuild. The research note also flagged the experience of the company’s senior finance and operations leadership, noting CEO Jim Anderson and CFO Sherri Luther have a record of operational performance, including previously expanding gross margins by roughly 1,200 basis points at Lattice Semiconductor.
TD Cowen’s $330 price target for Coherent is underpinned by roughly 44 times the firm’s fiscal 2027 earnings per share estimate of $7.43. The company’s market capitalization is reported at $48.9 billion. Separately, Stifel increased its price target for Coherent to $275, citing the firm’s positioning in AI datacenter buildout and noting a $2 billion strategic investment and purchase commitment from NVIDIA as a highlighting factor.
Ciena
TD Cowen also initiated coverage of Ciena with a Buy rating, assigning a $425 price target and adding the company to its Top Picks list. The firm sees Ciena as well placed to capture demand driven by AI infrastructure, with particular strength in datacenter interconnect and an enhanced intra-datacenter offering following its recent Nubis acquisition. TD Cowen underscored Ciena’s deep heritage in long-haul optical technology and its fully integrated fiber optics franchise, developed over years of leadership in coherent optics.
The research note pointed out that Ciena’s direct cloud revenues reached 32 percent in the most recent quarter, reflecting hyperscale customers’ investment in their own transport networks. TD Cowen framed the early-stage scaling across the market as a key growth opportunity, given Ciena’s leadership in datacenter interconnect.
TD Cowen’s $425 price target for Ciena is based on roughly 48 times the firm’s fiscal 2027 earnings per share estimate of $8.90. The firm also cited management continuity as a supportive factor, noting CEO Gary Smith has led Ciena since 2001.
In recent company developments, Ciena reported a strong quarter and raised its fiscal 2026 revenue guidance, a performance that prompted several analyst actions. Among those were an upgrade to Buy from BofA Securities and price target increases from UBS, Barclays, and Rosenblatt, according to the note.
Valuation and exposure considerations
Both firms’ price targets are explicitly tied to fiscal 2027 earnings estimates and represent high multiples of those projections. TD Cowen’s valuations reflect expectations for material improvement in each company’s financial model as AI-related datacenter investment scales. The firm praised technological differentiation, product breadth in optical and connectivity solutions, and experienced management teams as core reasons for the Buy ratings.
Sector implications - TD Cowen’s call places emphasis on segments of the telecom and networking supply chain exposed to datacenter buildouts, including optical component makers, transceiver suppliers, and systems vendors focused on datacenter interconnect and intra-datacenter transport.
What remains uncertain
The research note outlines opportunity but also implicitly ties outcomes to the pace and scale of AI infrastructure deployment and to the accuracy of forward-looking earnings estimates. Both companies are presented as beneficiaries of an evolving market where adoption patterns for higher-speed connectivity and coherent optics will be key to realizing the upside TD Cowen models.