Three major AI infrastructure suppliers—Coherent, Teradyne, and Ciena—fell 10–11% on Tuesday, making them the S&P 500's biggest decliners as investors rotated out of semiconductor and AI hardware stocks.
The move was triggered by a 19-year high in 30-year Treasury yields, cooled sentiment around Anthropic's below-forecast revenue rate, and disclosure of $3 trillion in off-balance-sheet AI commitments.
All three carry stretched valuations (trailing P/Es of 57x–143x) despite strong year-over-year revenue growth, making them first to sell in rotation periods.
What happened
Shares of three AI infrastructure suppliers fell sharply on Tuesday—Coherent down 11%, Teradyne down 10%, and Ciena down 10%—making them the S&P 500's three biggest decliners. The selloff was driven by a broad rotation out of semiconductor and AI hardware stocks into healthcare, utilities, and energy, triggered by a 19-year high in 30-year Treasury yields and sentiment cooled by Anthropic's disclosure of a $65 billion annualized revenue run rate (below whisper numbers) and reports of roughly $3 trillion in off-balance-sheet AI commitments across nine top tech names.
Why it matters
All three companies carry stretched valuations that make them vulnerable on rotation days. Coherent trades at a trailing P/E of 79x and forward P/E of 32x; Teradyne at 57x trailing and 45x forward; Ciena at 143x trailing and 52x forward. Despite strong fundamentals—Coherent's Q4 revenue up 33.7% year over year, Teradyne's Q2 revenue up 103.9% year over year, and Ciena's cloud-provider revenue up 70% year over year—these high valuations make them the first names investors exit when sector sentiment shifts.
What to watch
Each stock remains substantially up year-to-date (Coherent 90%, Teradyne 129%, Ciena 90%) and over the past year (Coherent 276%, Teradyne 306%, Ciena 390%), signaling that analyst conviction remains intact—average targets are $411 for Coherent, $450 for Teradyne, and $560 for Ciena, with 76–78% bullish sentiment across all three. Near-term volatility should be expected in high-multiple growth names if broader AI spending or Treasury-yield concerns persist.
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The Tuesday selloff of Coherent, Teradyne, and Ciena reflects a classic risk-off rotation within the technology sector rather than deteriorating company fundamentals. All three are picks-and-shovels suppliers to AI datacenter buildout—Coherent in optical transceivers and photonics, Teradyne in semiconductor test equipment (roughly 70% of revenue tied to AI), and Ciena in optical networking gear for hyperscaler interconnect. Each posted strong recent earnings: Coherent beat with adjusted EPS of $1.74 versus $1.62 expected, Teradyne delivered 103.9% year-over-year revenue growth, and Ciena saw management raise full-year guidance with cloud providers now representing 46% of revenue.
The trigger was not a fundamental miss but a confluence of macro headwinds and sentiment shifts. The 30-year Treasury hit a 19-year high, compressing valuations for long-duration growth stocks. Anthropic's disclosure of a $65 billion annualized revenue run rate—below market whisper numbers—signaled that AI monetization may be moving slower than some investors expected. Reports of roughly $3 trillion in off-balance-sheet AI commitments across nine major tech firms raised questions about the sustainability of near-term spending. Under these conditions, the highest-multiple names are first to exit portfolios during rotation days. Coherent's trailing P/E of 79x, Teradyne's 57x, and Ciena's 143x make them prime candidates for sector exit flows, even as the underlying demand for AI infrastructure remains intact and analyst sentiment stays constructive.
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