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Coherent Corp. (NYSE:COHR) is one of the best US stocks to buy and hold for the next 5 years. On June 16, Coherent signed a letter of intent to receive $50 million in direct funding under the CHIPS and Science Act to expand its 6-inch Indium Phosphide/InP semiconductor facility in Sherman, Texas. This investment aims to double the site’s manufacturing space and quadruple its wafer production capacity to meet the surging demand for optical networking technologies essential to AI data centers.

The project is expected to create over 1,000 jobs, including 550 direct technical and manufacturing roles. By scaling up the production of InP-based photonic devices, a critical component for high-speed data transmission, the expansion reinforces US domestic supply chain resilience and strengthens Coherent Corp.’s (NYSE:COHR) long-standing partnership with NVIDIA (NVDA) to support next-gen AI infrastructure.

Supported by both federal CHIPS funding and state-level incentives, this initiative underscores the vital role of photonics in overcoming data bottlenecks within large-scale AI computing architectures. The expansion establishes the Sherman site as a premier global hub for optical networking innovation, helping to secure American leadership in the manufacturing of technologies that power the modern AI economy.

Coherent Corp. (NYSE:COHR) engages in the development, refinement, manufacturing, and marketing of engineered materials, opto-electronic components and devices, and lasers for use in the industrial, communications, electronics, and instrumentation markets.

While we acknowledge the potential of COHR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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