Coherent (COHR) shares surged 6.17% during Thursday's intraday trading session, staging a sharp reversal from early-session losses as investors refocused on the bullish implications of potential U.S. regulatory action against Chinese optical transceiver imports.

The stock had initially faced significant profit-taking pressure, declining in pre-market and early regular trading after rallying more than 15% since August 4. That rally was ignited by reports that the U.S. Federal Communications Commission is drafting measures to ban imports of new Chinese optical transceiver modules, a move aimed at protecting AI data center critical infrastructure. The early sell-off reflected short-term traders locking in gains, but the underlying policy catalyst continued to attract buyers.

The broader optical communication sector also moved higher during the session, with names such as AXT Inc, POET Technologies, and Lumentum posting gains alongside Coherent. The sustained sector strength underscores market confidence that domestic optical component manufacturers stand to benefit significantly from any restrictions on Chinese imports, with Coherent well-positioned ahead of its upcoming fiscal fourth-quarter earnings report.