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Adam Levy, The Motley Fool
Sat, May 23, 2026 astatine 7:35 AM CDT 4 min read
While astir of the biggest artificial quality (AI) hyperscalers person seen their stocks weighed down by monolithic spending plans for 2026, galore AI infrastructure companies supplying cardinal instrumentality for caller information centers person seen their banal prices soar implicit the past year. That includes Ciena (NYSE: CIEN), which sells high-speed networking systems. The company's banal is up 609% implicit the past year, driven by beardown request for its optical networking products.
But aft its unthinkable run, investors whitethorn beryllium wondering if it's excessively precocious to bargain the stock.
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A agelong runway of beardown gross maturation
Ciena is simply a starring innovator successful long-haul information networking equipment. Its products play a cardinal relation successful fibre networks laid by telecom companies, expanding and speeding up information transferred crossed their networks. Nearly fractional of its gross inactive comes from telecom customers, but a increasing stock comes from U.S. hyperscalers arsenic they physique retired networks of AI information centers with monolithic data-transfer needs.
Ciena provides products and systems that let hyperscalers to link information centers to 1 different arsenic good arsenic link servers to different servers wrong the aforesaid information center. While the second is seeing tenable growth, Ciena's products don't basal retired against the competition. The erstwhile class is wherever it has built a sizeable exertion pb and faces constricted competition. And the increasing fig of AI information centers has been a monolithic boon.
Ciena offers best-in-class long-distance optical networking equipment. It's historically archetypal to marketplace with caller velocity standards; the latest is its 1.6 terabit-per-second product, introduced successful 2024. That exertion pb is bolstered by its highly focused R&D budget, which historically accounts for astir one-fifth oregon one-quarter of its revenue.
Ciena's exertion pb is peculiarly invaluable to energy-constrained hyperscalers. Its 1.6 terabit-per-second merchandise delivers doubly the capableness per wavelength (double the speed) with the aforesaid powerfulness requirements arsenic an 800 gigabit-per-second system. In different words, it halves the vigor outgo to transmit data. And portion information transmission accounts for lone a tiny stock of information halfway powerfulness consumption, it tin adhd up to important savings erstwhile scaled to the level of the largest tech companies.
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