Zacks Rank #1 (Strong Buy) stock Ciena Corporation (CIEN) is a leading provider of optical networking equipment, software, and services. Ciena is best known for its optical networking solutions, which use light signals overh fiber-optic cables to transmit data across vast distances at the speed of light.
Simply put, Ciena serves as the ‘plumbing’ of the digital world, building the high-tech pipes, switches, and software that move massive amounts of data across the internet. The company manufactures the essential hardware and software for numerous big tech and telecom carriers that help deliver internet service to end users.
Ciena Benefits from the AI Revolution
Already, the artificial intelligence buildout is the largest industrial buildout in history (by spending). That said, the latest earnings reports from big tech companies prove that the trend of mind-boggling AI spending is still accelerating. Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT), and Meta Platforms (META) spent a combined $165 billion on CAPEX in Q2 (an 87% year-over-year increase). Additionally, several of these companies upped forward CAPEX guidance.
Image Source: Creative Planning @CharlieBilello
That’s good news for Ciena. While NVIDIA ((NVDA) GPUs serve as the computational engines for training and running AI models, Ciena builds the pipes that move the data. As AI models expand, single data centers cannot house and power all the compute under one roof. Instead, AI infrastructure is transforming into “AI” factories scattered in different locations. Without high-performance optical networks like Ciena, NVDA GPU clusters sit inactive, waiting for more data.
CIEN: AI-Driven Growth & Backlog
Ciena is witnessing encouraging growth trends amid higher network traffic and bandwidth consumption across cloud and service provider environments. Customers are prioritizing investments in network infrastructure to support AI model training, data ingestion, and inference workloads.
The latest Zacks Consensus Analyst Estimates project that CIEN’s annual EPS will jump triple digits in 2026 and 47% in 2027. Meanwhile, the company sports a record backlog, providing investors with multi-year growth visibility and confidence.
Image Source: Zacks Investment Research
CIEN Successfully Tests 200-day MA
CIEN shares have finally retreated after a massive multi-year advance. Last week, the stock bounced off the 200-day moving average, signaling renewed demand.
Image Source: TradingView
Bottom Line
As hyperscalers scale out distributed AI factories, high-speed optical networking infrastructure becomes a vital link that prevents high-cost GPU clusters from going idle. With triple digit EPS growth on the horizon and a record backlog, CIEN shares are poised to rally.
— Andrew Rocco
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Source: Zacks
