Ciena Corporation (CIEN) is not a pure-play artificial intelligence (AI) company like Nvidia (NVDA), yet without it, AI at a global scale just won’t work. This is precisely why investors are starting to pay attention. Ciena's shares have climbed 108% year-to-date (YTD) and 733% over the past 52 weeks, outperforming the top AI stocks and the overall market.
Is it too late to grab CIEN stock now?
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www.barchart.com About Ciena
Sitting at a market cap of $67.9 billion, Ciena designs and sells high-speed optical networking equipment and software that move massive amounts of data across long distances. While it doesn’t build AI systems, it does provide the infrastructure that enables cloud platforms, telecom carriers, and hyperscalers to send and receive data at extremely fast speeds.
A Blowout Start to 2026
This year, the spotlight fell on CIEN stock after it reported a blowout start to fiscal 2026. The company reported revenue of $1.43 billion, marking a 33% year-over-year (YoY) increase. Earnings per share (EPS) doubled from the year-ago quarter to $1.35. However, this was not a one-off surge. During the Q1 earnings call, management stated that demand remains “incredibly strong,” backed by exceptional order activity and long-term customer commitments. This led to a $2 billion backlog in a single quarter, bringing the total backlog to $7 billion, indicating continued revenue growth through 2027.
Ciena is seeing strong order growth in key growth markets like India, reflecting global demand for high-speed connectivity solutions tied to AI expansion. Notably, demand is not the issue, but supply is. Ciena believes its sales could have been significantly higher if it had not suffered industry-wide supply constraints. Ciena emphasized that four of the biggest hyperscalers intend to expand their capital expenditures to more than $600 billion combined by 2026. And this expenditure is not restricted to chips and servers but also networking, which Ciena looks to benefit from.
AI applications depend on massive volumes of data being transferred across servers, clusters, and data centers. At the same time, massive AI data centers are being interconnected across regions, creating demand for high-speed data center interconnect solutions. This is still in its early stages, so the long-term opportunity for Ciena is enticing. Management also noted that traditional copper-based connections are approaching their physical limits as data speeds and power requirements increase. Optical technologies are gradually replacing them, creating fresh prospects for Ciena. To meet this demand, Ciena is investing heavily in next-generation interconnects, such as pluggable optics and co-packaged solutions.
Management expects fiscal 2026 to be another successful year for the company as it strengthens ties with hyperscalers, service providers, and emerging "neoscalers," all of which are aggressively expanding their AI infrastructure. For fiscal 2026, revenue could land between $5.9 billion and $6.3 billion, representing a 28% YoY increase at the midpoint, in line with the consensus estimates. Analysts expect a 132.4% increase in earnings in fiscal 2026 to $6.14 per share. Currently, CIEN stock is trading at 60 times forward 2027 earnings, which are expected to increase by 34%.
The Underhyped AI Play Wall Street Is Bullish On
For years, the AI frenzy has been dominated by semiconductors. However, AI cannot function effectively without fast, dependable, and large-scale data transfer. With a growing backlog and an expanding product portfolio, Ciena is emerging as one of the key enablers of AI-driven networks. While this underhyped AI play has the potential to be a great long-term growth stock, it is now trading at a premium. Risk-averse investors may prefer to wait for a more favorable entry point.
Additionally, investors can also consider ETFs as a smart way to play CIEN stock now. The iShares U.S. Telecommunications ETF (IYZ) holds 5.18% weightage in CIEN stock, while the iShares U.S. Digital Infrastructure ETF (IDGT) holds 5.5% and the SPDR S&P Telecom ETF (XTL) holds 3.8% of the stock.
Overall, Wall Street rates CIEN stock a “Moderate Buy.” Of the 18 analysts covering the stock, 11 rate it a “Strong Buy,” two rate it a “Moderate Buy,” and five rate it a “Hold.” The stock has surpassed both its average target price and high price target.
www.barchart.com On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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