Deutsche Bank Names 2 Stocks for AI's Next Wave
Deutsche Bank recommends Lumentum (LITE) and Coherent (COHR) as top AI hardware picks, citing their role in AI data centers. Both companies reported strong Q4 revenue and received Buy ratings. LITE expects Q1 2027 revenue of $1.225B-$1.275B, while COHR saw a 34% YoY revenue increase. Deutsche Bank also initiated Buy ratings for ANET, CSCO, and HPE.
How this was made
The 30-second read
Why it matters
The analyst initiations and earnings beats provide fresh catalysts that could drive short‑term price appreciation.
Market read
Positive earnings and analyst upgrades for Lumentum and Coherent reinforce the AI infrastructure narrative, likely boosting related stocks.
What to watch
Potential slowdown in hyperscaler capex or competitive pressure from emerging silicon‑photonic rivals.
Background
Deutsche Bank analysts broaden AI infrastructure coverage beyond GPUs, focusing on optical components essential for data‑center bandwidth.
Ticker impact
Deutsche Bank initiated Lumentum with a Buy rating, citing Q4 revenue of $1.01B and Q1 2027 guidance of $1.225‑$1.275B.
Potential upside of 5‑10% as investors price in higher guidance.
Strong margins, supply constraints and a $2B Nvidia investment support premium valuation.
Deutsche Bank initiated Coherent with a Buy rating after Q4 revenue of $2.05B (+34% YoY) and 40.2% gross margin.
Potential upside of 4‑8% as the market digests the earnings beat.
Growth driven by AI data‑center optics and a $2B Nvidia investment reinforces the thesis.
Market effects
Strengthens the AI hardware and optical connectivity subsector, benefiting peers like ANET, CSCO, HPE.
U.S. tech sector gains as AI spending outlook improves.
Highlights the role of photonics in worldwide AI data‑center expansion.
Counterpoint
If supply constraints ease faster than expected, pricing power may erode and valuations could compress.
Key entities
- AnalystDeutsche Bank
Provides buy initiations and market commentary on AI hardware.
- Corporate PartnerNvidia
Invested $2B in both Lumentum and Coherent, underscoring demand.
