CIEN

Corning Incorporated GLW is scheduled to report third-quarter 2026 earnings on Oct. 27, 2026. The Zacks Consensus Estimate for sales and earnings is pegged at $5 billion and 88 cents per share, respectively. Earnings estimates for GLW have increased 0.61% to $3.29 for 2026 and increased 0.47% to $4.3 for 2027 over the past 60 days. Image Source: Zacks Investment Research The advanced glass substrates producer has a solid trailing four-quarter earnings surprise history. It delivered a four-quarter earnings surprise of 1.75%, on average. Image Source: Zacks Investment Research Our proven model predicts a likely earnings beat for Corning for the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter. That is exactly the case here. Corning currently has an ESP of +0.68% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here. Corning's Optical Communications business is expected to remain a key driver of its third-quarter 2026 performance. Growing investment in AI infrastructure and hyperscale data centers is boosting demand for optical fiber, cables and high-density connectivity solutions. Multiyear agreements with Amazon and NVIDIA, along with Corning's previously announced partnership with Meta, provide further support for demand. The company's September agreement with Verizon to supply high-density optical fiber and connectivity solutions through 2032 also strengthens its long-term growth prospects. Corning's Solar business is another important factor to watch as the company seeks to improve profitability following production-related disruptions. An extended maintenance shutdown and equipment upgrades at the wafer facility weighed on profitability during the second quarter. Management expects sales and profits to improve in the third quarter as production resumes and operational efficiency strengthens. However, performance across other businesses remains uneven. Demand trends in consumer electronics and automotive markets, along with higher memory prices affecting smartphones, could hinder growth in some of Corning's businesses. Over the past year, Corning has surged 41.8% compared with the industry's growth of 100.8%. It has outperformed peers like Amphenol Corporation APH but lagged Ciena Corporation CIEN over this period. While Amphenol has gained 9.2%, Ciena has jumped 80.2%. Image Source: Zacks Investment Research From a valuation standpoint, Corning appears discounted relative to the industry and is trading below its mean. Going by the price/earnings ratio, the company's shares currently trade at 30.24 forward earnings, lower than 31.13 for the industry and higher than the stock's mean of 26.57. Image Source: Zacks Investment Research Corning is strengthening its position in the expanding AI infrastructure market through its optical connectivity portfolio and relationships with major technology companies. As data centers require greater bandwidth and more sophisticated networking capabilities, demand for optical fiber, cable and connectivity products could provide a significant growth opportunity. The company's planned expansion of U.S. manufacturing capacity and its investment in next-generation optical technologies further support its long-term prospects. Under the upgraded Springboard plan, management aims to reach annualized sales run rates of $20 billion by the end of 2026, $30 billion by the end of 2028 and $40 billion by the end of 2030. However, these targets depend on successful execution and sustained customer demand. The Solar business offers another potential source of growth as Corning expands its U.S. manufacturing capabilities across polysilicon, wafers and modules. A recovery in production efficiency could support improved segment profitability. AI-driven demand for optical connectivity, long-term customer agreements and improving operating margins are major positives for Corning ahead of third-quarter results. The anticipated recovery in Solar profitability could provide an additional boost. Sustained improvement in its profitability and cash generation over the past few quarters is a tailwind. Hence, with a Zacks Rank #2, Corning appears to be a good investment option at present. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Corning Incorporated (GLW) : Free Stock Analysis Report Ciena Corporation (CIEN) : Free Stock Analysis Report Amphenol Corporation (APH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Thermo Fisher Scientific Inc. TMO delivered third-quarter 2026 adjusted earnings of $6.68 per share, up 15% year over year. The figure beat the Zacks Consensus Estimate by 4.4%. Revenues rose 9% to $12.14 billion and surpassed the consensus mark of $11.92 billion by 1.8%. Results were supported by 6% organic revenue growth and improved operating profitability, reflecting the strength of the company's growth strategy and PPI Business System. Following the earnings announcement, TMO stock fell 4.1% in pre-market trading today. Life Sciences Solutions revenues increased 5.1% year over year to $2.72 billion. Segment income rose to $1.02 billion from $968 million, while the segment income margin expanded 20 basis points (bps) to 37.6%. Laboratory Products and Biopharma Services remained the largest business, with revenues climbing 15% to $6.86 billion. Segment income increased to $1.07 billion from $868 million, while margin improved to 15.5% from 14.5%. The segment accounted for 56.5% of consolidated revenues before eliminations. Analytical Instruments revenues advanced 5.8% year over year to $2 billion. Segment income jumped to $538 million from $429 million, driving margin expansion to 26.9% from 22.6%. The 430-bps improvement was the largest among the company's four segments. Specialty Diagnostics revenues declined 6.5% to $1.1 billion. However, segment income increased to $341 million from $321 million, while margin expanded to 31% from 27.4%. The improvement in profitability despite lower revenues highlights the segment's stronger operating efficiency. Adjusted operating income increased 15% year over year to $2.97 billion. The adjusted operating margin widened 120 bps to 24.5%, reflecting profitability improvements across all four business segments. On a GAAP basis, operating income rose 17% to $2.26 billion, while the operating margin improved to 18.6% from 17.4%. The cost of revenues totaled $6.95 billion, selling, general and administrative expenses were $1.86 billion, and research and development spending amounted to $348 million. GAAP earnings per share increased 9% to $4.64. Thermo Fisher ended the third quarter with cash and cash equivalents of $5.46 billion compared with $9.85 billion at the end of 2025. Total assets stood at $114.23 billion, while long-term obligations amounted to $39.11 billion. For the first nine months of 2026, net cash provided by operating activities increased to $5.87 billion from $4.36 billion a year earlier. Free cash flow rose to $4.62 billion from $3.32 billion. During this period, acquisitions net of cash acquired totaled $8.88 billion, share repurchases reached $4 billion, and dividends paid amounted to $511 million. Thermo Fisher partnered with Mayo Clinic to launch Precure, an initiative combining data from more than one million patient samples with its proteomics technologies. The collaboration aims to advance disease research, earlier detection and precision medicine. The company also opened its first AI-Automation Innovation Center in South Korea to help customers accelerate innovation and research productivity. Additionally, a highly automated distribution center in Kentucky expanded its North American supply capabilities. Thermo Fisher completed the previously announced divestiture of its microbiology business during the quarter. Management highlighted the effectiveness of its growth strategy and operational execution. Chairman and CEO Marc N. Casper expressed confidence in delivering strong results for 2026 and creating long-term stakeholder value. The company is scheduled to provide updated full-year financial guidance during its Oct. 21 earnings conference call. Thermo Fisher Scientific Inc. price-consensus-eps-surprise-chart | Thermo Fisher Scientific Inc. Quote Thermo Fisher ended the third quarter with both earnings and revenues beating respective estimates. Performance reflected the strength of the company's proven growth strategy, strong execution and the power of the PPI Business System. Expansion of the adjusted operating margin in the quarter is also very promising. During the quarter, Thermo Fisher launched the Orbitrap Isora mass spectrometer — its first Orbitrap system designed for isotope ratio analysis — enabling faster workflows and deeper insights into sample composition. Other launches included the EMPAD G2 electron detector for advanced materials characterization and the FDA-cleared EliA CTD 13 Screen for systemic connective tissue diseases. The company also introduced the Ion 560 Chip, offering nearly twice the sequencing capacity of its predecessor to support growing genomic profiling requirements. Thermo Fisher currently carries a Zacks Rank #3 (Hold). Some top-ranked stocks from the broader Computer and Technology sector are Micron Technology MU, Richardson Electronics, Ltd. RELL and Ciena CIEN. Micron Technology, sporting a Zacks Rank #1 (Strong Buy) at present, reported a fourth-quarter fiscal 2026 EPS of $33.42, which beat the Zacks Consensus Estimate by 5.73%. Revenues of $54.23 billion surpassed the Zacks Consensus Estimate by 6.33%. You can see the complete list of today's Zacks #1 Rank stocks here. MU has an earnings yield of 18.7% compared with the industry's 4.5% yield. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 21%. Richardson Electronics, currently sporting a Zacks Rank #1, posted a first-quarter fiscal 2027 EPS of 27 cents, topping the Zacks Consensus Estimate by 200%. Revenues of $64.92 million beat the Zacks Consensus Estimate by 10.07%. RELL has an estimated fiscal 2027 earnings growth rate of 62.5% compared with the industry's 46.2% growth. The company's earnings beat estimates in each of the trailing four quarters, the average surprise being 110%. Ciena, sporting a Zacks Rank #1 at present, reported third-quarter fiscal 2026 EPS of $2.11, which topped the Zacks Consensus Estimate by 21.26%. Revenues of $1.67 billion surpassed the consensus mark by 1.44%. CIEN has an estimated fiscal 2026 earnings growth rate of 171.2% compared with the industry's 35.3% growth. The company's earnings beat estimates in each of the trailing four quarters and matched on one occasion, the average surprise being 17.55%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report Ciena Corporation (CIEN) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report Richardson Electronics, Ltd. (RELL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Taiwan Semiconductor Manufacturing Company Ltd. TSM, or TSMC, reported third-quarter 2026 earnings of $4.60 per ADR unit, which increased 68.7% year over year. The bottom line surpassed the Zacks Consensus Estimate of 3.4%. Revenues rose 41.2% year over year to $46.72 billion and beat the Zacks Consensus Estimate by 2.4%. Results reflected strong revenue growth, with advanced process technologies accounting for 79% of total wafer revenues. TSMC's revenues increased 16.2% sequentially in U.S. dollar terms, reflecting stronger momentum compared with the preceding quarter. In Taiwan dollar terms, revenues jumped 17.6% quarter over quarter. The top-line performance exceeded management's previous guidance range of $44.6 billion-$45.8 billion. The results also surpassed the roughly 12% sequential growth implied by the midpoint of the earlier guidance. The 3-nanometer process accounted for 33% of total wafer revenues in the third quarter, increasing from 30% in the preceding quarter. Meanwhile, the 5-nanometer process contributed 28%, declining from 33% in the second quarter. Taiwan Semiconductor Manufacturing Company Ltd. price-consensus-eps-surprise-chart | Taiwan Semiconductor Manufacturing Company Ltd. Quote The 7-nanometer process represented 10% of wafer revenues compared with 11% in the previous quarter. These contributions demonstrate the evolving distribution of wafer revenues across Taiwan Semiconductor's established advanced manufacturing technologies. The 2-nanometer process accounted for 8% of total wafer revenues, up from 3% in the second quarter. This five-percentage-point sequential increase marked a significant shift in the contribution from the company's newest manufacturing technology. Advanced technologies, defined as processes of 7 nanometers and below, remained the dominant component of wafer revenues. The increasing contribution from 2-nanometer manufacturing reflects the ongoing transition toward newer semiconductor production processes. TSMC's gross margin was 66.4%, which expanded 690 basis points (bps) from the year-ago quarter but contracted 130 bps sequentially. The sequential decline coincided with the ongoing ramp-up of the company's 2-nanometer manufacturing technology. Operating margin of 58.7% expanded 810 bps year over year but contracted 160 bps sequentially. TSM's net profit margin was 51.1%, which expanded 540 bps year over year but declined 450 bps sequentially. As of Sept. 30, 2026, Taiwan Semiconductor's cash and marketable securities totaled NT$4 trillion or $126 billion in U.S. dollar terms. Its cash balance increased NT$488 billion sequentially to NT$3.6 trillion. The company generated approximately NT$920 billion in cash from operations and incurred capital expenditures of NT$443 billion or $13.8 billion. TSMC also distributed NT$156 billion in cash dividends during the third quarter. Management now expects full-year 2026 revenues to increase approximately 44% year over year in U.S. dollar terms. The outlook reflects continued robust demand for leading-edge technologies, supported by the company's strong technology differentiation and broad customer base. The Zacks Consensus Estimate is pegged at $168.19 billion. For the fourth quarter of 2026, revenues are expected in the range of $52.3-$54.3 billion. The midpoint implies sequential growth of roughly 14% and year-over-year growth of 58%, based on an exchange rate assumption of NT$31.8 per U.S. dollar. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $48.78 billion. Gross margin is projected between 65% and 67%, while operating margin is expected in the 56.5-58.5% range. TSMC delivered solid third-quarter results, with both earnings and revenues surpassing estimates. The performance was marked by robust year-over-year revenue growth and an increasing contribution from advanced process technologies. The 2-nanometer process gained traction, while 3-nanometer technology remained the largest contributor to wafer revenues, highlighting the company's evolving technology mix. However, sequential contractions in gross, operating and net profit margins warrant attention. Currently, TSMC carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the broader Computer and Technology sector are Micron Technology MU, Richardson Electronics, Ltd. RELL and Ciena CIEN. Micron Technology, sporting a Zacks Rank #1 (Strong Buy), reported a fourth-quarter fiscal 2026 EPS of $33.42, which beat the Zacks Consensus Estimate by 5.73%. Revenues of $54.23 billion surpassed the Zacks Consensus Estimate by 6.33%. You can see the complete list of today's Zacks #1 Rank stocks here. MU has an earnings yield of 18.7% compared with the industry's 4.5% yield. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 21%. Richardson Electronics, sporting a Zacks Rank #1, posted a first-quarter fiscal 2027 EPS of 27 cents, exceeding the Zacks Consensus Estimate by 200%. Revenues of $64.92 million beat the Zacks Consensus Estimate by 10.07%. RELL has an estimated fiscal 2027 earnings growth rate of 62.5% compared with the industry's 46.2% growth. The company's earnings outpaced estimates in each of the trailing four quarters, the average surprise being 110%. Ciena, sporting a Zacks Rank #1, reported third-quarter fiscal 2026 EPS of $2.11, which topped the Zacks Consensus Estimate by 21.26%. Revenues of $1.67 billion surpassed the consensus mark by 1.44%. CIEN has an estimated fiscal 2026 earnings growth rate of 171.2% compared with the industry's 35.3% growth. The company's earnings beat estimates in each of the trailing four quarters and matched on one occasion, the average surprise being 17.55%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report Ciena Corporation (CIEN) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report Richardson Electronics, Ltd. (RELL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

What happens across this Global Week Ahead? - The IMF-World Bank meetings take place in Bangkok, against - A backdrop of high energy costs and rising central bank rates, while - The latest U.S. and China macro data - Wall Street Q3 earnings, and - Turbulent bond markets point to a packed week ahead Next are Reuters' five world market themes, re-ordered for equity traders— It's the start of Q3 U.S. earnings season, and who better to kick things off than the banks? Four of the six largest U.S. lenders, JPMorgan Chase JPM, Goldman Sachs GS, Citigroup C and Wells Fargo WFC, report on Tuesday, followed a day after by Morgan Stanley MS and Bank of America BAC. Earnings are ‌expected to rise up to +20% relative to last year. Still, the surge in Treasury yields to multi-decade highs has hurt shares — the KBW Bank Index is down around -13% from its peak in August. Investors will be looking for signs that the recent spike in government borrowing costs may curb dealmaking and lending growth, as well as pressure funding costs across the industry. Surging government borrowing costs are clearly luring some investors back to bonds as evidenced by the strong demand at the latest U.S. and Japanese auctions. But do you really want to catch a falling knife? That's the question for traders in the coming week as the bond selloff shows few signs of abating. U.S. and French bond yields have hit fresh 24-year highs and market volatility is high. The French-German 10-year bond yield spread, at around 136 basis points, was below 100 bps a month ago. The speed and scale of the rise in the French risk premium is hurting Italian peers, the euro and European shares. It's also led to some finger-pointing at the role of hedge funds — that fast-money group that has stepped up its presence in systemically important bond markets of late. A fresh look at U.S. inflation on Wednesday will be among the last key data released before the Federal Reserve decides whether to hike interest rates again to contain high prices. The September CPI is set to show a 0.6% rise on a monthly basis. The core measure, excluding volatile energy and food components, is estimated to increase just 0.2%, according to a Reuters poll. Thursday's Producer Price Index (PPI) numbers will further flesh out the inflation picture. Retail sales data is also out that day. Core CPI for August rose at its fastest pace in four months, helping cement the Fed's first rate hike since 2023. Bets on another hike when the Fed meets in late October have fallen back. A hot CPI report could change that. Chinese data on Wednesday will show whether AI-related exports are still propping up an economy hobbled by anemic demand at home. Overseas shipments from the world's second-largest economy have logged double-digit growth for ???four straight months on surging global demand for AI goods, electric vehicles, solar cells and lithium-ion batteries. But a prolonged property slump has kept domestic consumption in the doldrums. Exports are forecast to have jumped +25.3% year-on-year in September in dollar terms, according to a Reuters poll, up from +25% in August. Imports are projected to show +23.5% growth versus +28.2% previously. Separate figures the same day are expected to show continuing price pressures related to the Iran war. The Producer Price Index is forecast to have risen to +4.4% in September from +3.8% the previous period, while consumer inflation may have edged up to +1.1% from +0.8%. The IMF and World Bank annual meetings go on tour to Bangkok next week with three themes front and center: growth, debt and geopolitics. Market focus is on Tuesday's updated IMF World Economic Outlook, given the Iran war has already forced two cuts to its global GDP forecast this year. IMF chief Kristalina Georgieva has signaled it won't make easy reading, given sky-high energy prices, record public debt and tetchy bond markets. Fractured and fractious geopolitics, including conflicts in the Middle East and Ukraine, will feature prominently, as will how to regulate AI given an arms race between the US and China. Senegal's recently announced debt rework plan is likely to get attention from IMF crisis watchers too, although they will have more than half an eye on whether France is dragging the Eurozone back in that direction as well. This week, I picked three fresh Zacks #1 (STRONG BUY) large-cap stocks. (1) Keysight Technologies KEYS: This is a $375 a share tech growth stock, with a market cap of $64.3B. It is found in the Zacks Electronics-Measuring Instruments industry. The stock holds a Zacks Value score of D, a Zacks Growth score of C, and a Zacks Momentum score of D. F12M P/E: 33.3. Image Source: Zacks Investment Research Keysight Technologies is a provider of electronic design and test instrumentation systems. Keysight's suite of connected car test solutions include Virtual Drive Test Toolset, which facilitates automakers to build virtual test routes in the lab by integrating network and channel emulation capabilities, and combining data captured in the field. Moreover, the company is evolving its expertise in software test automation capabilities. Meanwhile, KeysightCare aids customers with end-to-end scalable support model solution loaded with robust test and measurement know-how to reduce time-to-market and enhance efficiency in a cost-effective manner. (2) Ciena CIEN: This is a $426 a share Communications stock, with a market cap of $63.3B. It is found in Zacks Communication Components industry. The stock holds a Zacks Value score of F, a Zacks Growth score of B, and a Zacks Momentum score of C. F12M P/E: 62.3. Image Source: Zacks Investment Research Ciena Corp. is a leading provider of optical networking equipment, software and services. Its reporting segments are: Networking Platforms, Platform Software & Services, Blue Planet Automation Software & Services, and Global Services. The Networking Platforms segment includes networking solutions optimized for the convergence of coherent optical transport, Optical Transport Network switching and packet switching. Its products include the 6500 packet-optical platform, the Waveserver family of products, 6500 Reconfigurable Line System, 5400 family of packet-optical platforms and coherent-optimized edge line system, the 3900 family of service delivery switches and service aggregation switches and the 5000 series of service aggregation platforms. The Platform Software & Services segment provides domain control management, analytics data and planning tools. Blue Planet is a comprehensive, cloud native and standards-based software portfolio that enables customers to realize their digital transformation. (3) A.P. Moller-Maersk AMKBY: This is an $18 a share global shipping stock, with a market cap of $58.2B. It is found in the Zacks Transportation-Shipping industry. The stock holds a Zacks Value score of A, a Zacks Growth score of B, and a Zacks Momentum score of B. F12M P/E: 7.3. A.P. Moeller-Maersk A/S operates as a shipping company. It operates container vessels, tankers, supply ships, special vessels, APM terminials and oil drilling rigs. A.P. Moeller-Maersk A/S is headquartered in Copenhagen, Denmark. Wednesday's U.S. CPI data for SEP is among the key inflation reports this week. On Sunday, the IMF World Bank meetings began in Bangkok. On Tuesday, the Reserve Bank of Australia (RBA) meeting minutes come out, and Mainland China releases a raft of macro data. Among this, China's CPI for SEP is reported. The consensus looks for +1.1% y/y, while the prior is +0.8% y/y. On Wednesday, the U.S. CPI for SEP gets released early. The prior broad CPI was +3.4% y/y, while the core CPI was +2.4% y/y. On Thursday, the U.S. PPI for SEP gets released. The prior AUG broad PPI was up +5.4% y/y, while the prior AUG core PPI was up +4.6% y/y. On Friday, the Euro Area core and broad HICP data for SEP gets released. Look for core HICP to remain unchanged at +2.5% y/y. Broad HICP should also remain unchanged at +3.8% y/y. On Oct. 7th, Zacks Research Director Sheraz Mian shared his Q3 earnings set-up. Key points: (1) The overall setup for the Q3 earnings season remains very favorable, with earnings growth expected to be in the double digits for the 8th consecutive quarter. The growth momentum is broad-based. 15 of the 16 Zacks sectors are expected to enjoy positive earnings growth, and the outlook steadily improving. (2) Total S&P500 earnings in Q3 are currently expected to increase +24.6% from the same period last year, on +11.5% higher revenues. (3) The revisions trend remains positive, sustaining the favorable revisions trend that has been in place for a year now. Since the start of Q3, earnings estimates have moved higher for half of the 16 Zacks sectors. We are seeing a similar trend for Q4 — and full-year 2027, as well. (4) Micron MU and Nvidia NVDA continue to be material contributors to the Info Tech sector's growth picture. Excluding Nvidia, Micron, and Alphabet GOOGL, which enjoyed an outsized gain in the preceding period? Q3 earnings for the rest of the Info Tech sector would be +20.7% (vs. +43.4% otherwise). That's all from me! Best of luck, in trading & investing. John Blank, PhD. Zacks Chief Equity Strategist and Economist Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report Bank of America Corporation (BAC) : Free Stock Analysis Report Wells Fargo & Company (WFC) : Free Stock Analysis Report JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report Morgan Stanley (MS) : Free Stock Analysis Report Citigroup Inc. (C) : Free Stock Analysis Report Ciena Corporation (CIEN) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report A.P. Moller-Maersk (AMKBY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Artificial intelligence is pulling huge amounts of money into chips, servers and data centers, while high inflation, expensive housing and uneven wealth gains pull in the opposite direction. That tension creates real opportunities and real risks for anyone with exposure to US tech heavyweights. This article breaks down how those crosscurrents link to AI infrastructure and examines several companies that appear especially exposed to the latest news backdrop. The stocks covered below are only a small sample of the idea, and the full screen surfaced 31 more large US-listed AI infrastructure players with equally compelling stories that are not covered here. To go straight to the source and identify, compare and analyze potential AI infrastructure and semiconductor leaders, head into the US AI Infrastructure and Semiconductor Leaders screener. Ciena is one of the clearest pure plays on the plumbing that lets AI data centers talk to each other. It supplies the high capacity optical and routing gear hyperscalers lean on as their GPU clusters swell and spill traffic across wide area networks. Ciena generates most of its revenue from Networking Platforms at about US$4.8b, with Global Services at roughly US$700 million, Platform Software and Services at about US$400 million, and Blue Planet at around US$100 million. The company is valued near US$63.8b in market cap. That backdrop is why analysts frame Ciena as a prime AI infrastructure beneficiary. Yet the real test will come if one unseen pressure on future profitability shifts. "Major cloud providers and a new wave of neo-scalers are aggressively investing in high-capacity, low-latency optical networking infrastructure to support AI workloads, driving multiyear, global network buildouts that should significantly expand Ciena's addressable market and underpin sustained, above-trend revenue growth." What happens if that powerful buildout trend meets changing economics around how much customers are willing to pay for each extra bit of bandwidth? If that pricing power question matters to your thesis, read the full narrative for Ciena to see how Ciena's AI buildout story could accelerate or stall next. Micron Technology is one of the clearest AI infrastructure plays in this screener, supplying the DRAM, high bandwidth memory and NAND storage that let GPUs, accelerators and data centers process and retain AI workloads at scale. Micron earns around US$43.1b from its Cloud Memory unit, US$37.6b from Core Data Center, US$36.6b from Mobile and Client and US$15.9b from Automotive and Embedded, with the stock valued near US$1,164.2b in market cap. For Micron, the AI capex boom crystallises into something very simple for investors: "Every AI accelerator needs high-bandwidth memory. Every inference system needs DRAM capacity. Every data center needs SSDs." What happens to Micron's AI-linked earnings power if the balance between tight supply and hungry demand shifts even slightly? If that delicate balance between supply and demand is what you care about, read the full narrative for Micron Technology to see how Micron Technology's AI memory story could accelerate or reach its limits. KLA is one of the key behind the scenes suppliers for AI infrastructure, providing the inspection and process control systems chipmakers rely on to turn multi billion dollar fab projects into usable wafers that actually power GPUs, high bandwidth memory and advanced data center processors. KLA generates most of its revenue, about US$12.2b, from Semiconductor Process Control, with PCB and Component Inspection at roughly US$750 million and Specialty Semiconductor Process around US$584 million, and the business carries a market value near US$255.2b. For KLA, the AI buildout theme appears not in GPUs but in the metrology and inspection gear that determines how many advanced chips pass yield targets and make it into servers. "Rising AI infrastructure and high bandwidth memory investment is lifting wafer equipment demand, and KLA's backlog of around US$12.5b, with lead times that extend into 2027 and 2028, supports multi year visibility that can translate into higher revenue and earnings quality." What happens if one unresolved cost and policy pressure reduces the profitability investors currently expect from that long dated AI driven backlog? That cost and policy risk is exactly where the full narrative for KLA picks up, showing how KLA's AI exposure could accelerate while cyclical noise masks the longer runway. Markets move fast. Fresh breakout stories can gain momentum while the data still feels under the radar. Review these ideas before the crowd rushes in. - Spot resilient compounders early and track how they handle stress by running the 31 resilient stocks with low risk scores before those sturdier balance sheets become fully priced in. - Explore income opportunities that may offer more than cash rates by scanning the 8 dividend fortresses while yields and coverage metrics still look appealing. - Look for durable cash generators involved in the next phase of automation with the 91 robotics and automation stocks before industrial AI spending is fully reflected in valuations. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Ciena (CIEN) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company. The upward trend in estimate revisions for this developer of high-speed networking technology reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core. The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008. For Ciena, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: For the current quarter, the company is expected to earn $2.05 per share, which is a change of +125.3% from the year-ago reported number. The Zacks Consensus Estimate for Ciena has increased 14.66% over the last 30 days, as eight estimates have gone higher compared to no negative revisions. For the full year, the earnings estimate of $7.16 per share represents a change of +171.2% from the year-ago number. The revisions trend for the current year also appears quite promising for Ciena, with nine estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 10.68%. The promising estimate revisions have helped Ciena earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500. While strong estimate revisions for Ciena have attracted decent investments and pushed the stock 19.4% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ciena Corporation (CIEN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Ciena (CIEN) moved back onto investor watchlists after a recent special call highlighted record third quarter fiscal 2026 results, new financial targets for 2029, and a planned overhaul of its reporting structure. Ciena’s special call came against a backdrop of sharp price swings. The share price has rallied 4.92% in the past day and 14.49% over the past week, even after a decline of 7.54% over 30 days and a 20.42% drop over 90 days. Total shareholder return over one year and three years has been very large, which points to momentum that has cooled recently but remains powerful over longer horizons. Compare Ciena’s AI-fueled momentum with other network and infrastructure plays by scanning our hand-picked 87 AI infrastructure stocks. Ciena has just surged on record results while trading at a sizeable discount to both analyst targets and intrinsic value estimates. Where does fair value really sit along that spread after this latest move? Ciena closed at $365.96 against a widely followed fair value estimate of $551.86, which frames the current move as investors reassessing how much AI networking demand is already reflected in the price. Major cloud providers and a new wave of neo-scalers are aggressively investing in high-capacity, low-latency optical networking infrastructure to support AI workloads, driving multiyear, global network buildouts that should significantly expand Ciena's addressable market and underpin sustained, above-trend revenue growth. Ciena's industry-leading solutions (WaveLogic 6, RLS platform, pluggables, DCOM) are rapidly becoming de facto standards for AI network infrastructure. This is resulting in sizable multi-hundred-million-dollar orders, a record order book, and strong visibility into 2026 growth, suggesting consensus revenue estimates may be too conservative. See why 46 investors see Ciena as 34% undervalued. Result: Fair Value of $551.86 (UNDERVALUED) Still, the Ciena story can break if a few big hyperscaler customers pull back orders or if newer open networking approaches undercut its core platforms. Find out about the key risks to this Ciena narrative. The DCF and fair value work suggest Ciena is about 33% undervalued, yet the simple P/E story reads very differently. At $365.96, the stock trades on roughly 79x earnings, versus a fair ratio of 52.2x, a US Communications sector average of 35.4x, and peer levels around 43x. That gap points to meaningful valuation risk if sentiment cools or growth assumptions are reconsidered. This raises a key question: which signal is more reliable when pricing uncertainty? See what the numbers say about this price — find out in our valuation breakdown. If this mix of enthusiasm and caution around Ciena leaves you undecided, move quickly to review the numbers yourself and refine your own perspective. To frame that view with both sides of the argument, start with 3 key rewards and 2 important warning signs. If Ciena has sharpened your focus, do not stop here. Broaden your watchlist with other clear setups that could suit very different investing playbooks. Hunt for mispriced opportunities that pair quality with value by scanning our 30 high quality undervalued stocks. Prioritise resilience and capital preservation by reviewing companies in the 30 resilient stocks with low risk scores. Spot future leaders before the crowd by checking the 17 high quality undiscovered gems. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CIEN. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

On September 3, 2026, Ciena Corporation (NYSE:CIEN) reported third-quarter fiscal 2026 results for the period ended August 1, 2026. Revenue rose 37% year-over-year to $1.67 billion, adjusted earnings per share more than tripled to $2.11, and backlog grew $800 million in the quarter to $8.5 billion. Adjusted gross margin reached 46.4% and adjusted operating margin hit a record 22.5%. On September 16, 2026, Ciena held its Investor Forum in Ottawa and announced fiscal 2029 targets: roughly 30% revenue CAGR from 2026 through 2029, approximately 50% adjusted gross margin, adjusted operating margin of 32% to 35%, and free cash flow margin of approximately 20%. Citi called the September 4 post-earnings selloff a buying opportunity, keeping a Buy rating and a $658 price target, arguing that management's initial 30% growth guidance for fiscal 2027 is "a floor that will move higher with increased supply." JPMorgan kept an Overweight rating, saying Ciena Corporation (NYSE:CIEN) "set a strong initial fiscal 2027 floor" as demand continues to build. The firm cut its price target on the stock from $635 to $605. After the investor forum, Northland raised its target to $550 from $500, keeping Outperform, saying the 2029 targets point to earnings power of $25 or more per share with upside potential. Rosenblatt reiterated Buy with a $525 target, calling the fiscal 2029 framework "promising" and noting the demand commentary reads through positively for Nokia as the other scaled optical data center interconnect vendor. Barclays raised its target to $548 from $475, staying Overweight. The operating detail backs the optimism: bookings in the first month of the fourth quarter nearly matched all of the third quarter's orders, management now projects more than $10 billion in backlog by year end with visibility into fiscal 2028, optical networking revenue rose 46% to $1.19 billion, and cloud provider revenue grew more than 80%. Morgan Stanley kept an Equal Weight rating both before and after the forum, cutting its target to $425 from $490 on September 4 over supply as a "key constraint," then raising it only modestly to $450 on September 17, saying it wants "a couple more quarters" of new products flowing through before gross margin becomes the catalyst it needs to see. TD Cowen cut its target sharply to $400 from $575 on September 4, despite keeping a Buy rating, calling the guide "seemingly disappointing to bulls" even with strong operating leverage. B. Riley cut its target to $347 from $413, keeping Neutral, citing multiple compression across AI-related optical stocks broadly. The costs of chasing demand are real: cash from operations is expected to decline in the fourth quarter as Ciena disperses funds to support long-term component agreements through 2029, two customers made up 41.7% of revenue, and roughly 70 basis points of the 46.4% adjusted gross margin came from a one-time tariff refund that will not repeat. Arrowstreet Capital increased its position 21% to 1.68 million shares worth $822.7 million as of the second quarter of 2026, and AQR Capital Management added 8% to reach 1.05 million shares worth $507.2 million. Jericho Capital Asset Management cut its stake 67% to 561,513 shares worth $275.5 million. Overall hedge fund ownership rose to 81 funds from 73 the prior quarter. Short interest sits at just 2.3% of float, a level consistent with the wave of target increases that followed the investor forum, and shares trade at 39.37 times forward earnings as of September 18, 2026. The two rounds of commentary tell the story better than either one alone. On September 4, several firms cut targets despite the beat because they wanted proof that the demand Ciena Corporation (NYSE:CIEN) described could translate into a real multiyear commitment rather than a supply-constrained expectation. By September 17, after Ciena Corporation (NYSE:CIEN) put concrete numbers behind that commitment, several firms raised targets again. What has not changed is the remaining question Morgan Stanley keeps asking: whether gross margin actually climbs toward that 50% target as Hyper-Rail and new interconnect products ramp, or whether supply constraints keep capping the pace for another year. While we acknowledge the potential of CIEN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years Disclosure: None. Follow Insider Monkey on Google News.

FULTON, Md., September 16, 2026--(BUSINESS WIRE)--Ciena® Corporation (NYSE: CIEN), the global leader in high-speed connectivity, held its Investor Forum today at its R&D facility in Ottawa, Ontario, Canada and announced its three-year financial targets. These targets are set forth below. Ciena’s three-year financial targets for fiscal year 2029 include: Revenue CAGR of approximately 30% from 2026 through 2029; Adjusted (non-GAAP) gross margin of approximately 50%; Adjusted (non-GAAP) operating margin in the range of 32% to 35%; and Free cash flow margins of approximately 20%. "The three-year financial targets announced today reflect both the opportunities we see ahead and our confidence in our ability to execute," said Marc Graff, Ciena’s Chief Financial Officer. "Backed by a differentiated portfolio, growing customer demand, expanding supply capacity, and new addressable market opportunities, we are well-positioned to deliver sustained revenue growth, significant profitability expansion, and attractive returns for our owners over the coming years." Ciena also announced a change to financial reporting segments beginning with fiscal 2027 to be reflected in Q1 fiscal 2027 results. Graff continued, "Our new reporting segments - Optical Systems, Interconnects, Global Services, and Routing and Other - will align well with our growth markets and allow our owners improved insight into our financial performance." Ciena is hosting an investor forum Wednesday, September 16 and Thursday, September 17, 2026, during which executives will discuss Ciena’s strategic priorities and portfolio roadmap that underwrite its financial objectives. The content of Mr. Graff’s and Mr. Rothenstein’s presentations, which include information about Ciena’s recent financial performance, one-and three-year financial targets, addressable market sizing, and future financial reporting segments to align with these opportunities has been made available in the Events & Presentations section of the Investor Relations section of Ciena’s website. Information related to other presentations from the Investor Forum 2026 will be posted on or about Thursday, September 17, 2026. About Ciena Ciena is the global leader in high-speed connectivity. We build the world’s most advanced networks to support exponential growth in bandwidth demand. By harnessing the power of our networking systems, interconnects, automation software, and services, Ciena revolutionizes data transmission and network management. With unparalleled expertise and innovation, we empower our customers, partners, and communities to thrive in the AI era. For updates on Ciena, follow us on LinkedIn or visit the Ciena website. Note to Ciena Investors You are encouraged to review the Investors section of our website, where we routinely post press releases, SEC filings, recent news, financial results, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that are based on our current expectations, forecasts, information and assumptions. These statements involve inherent risks and uncertainties. Actual results or outcomes may differ materially from those stated or implied, because of risks and uncertainties, including those detailed in our most recent annual and quarterly reports filed with the SEC. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies and can be identified by words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Ciena assumes no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise "The three-year financial targets announced today reflect both the opportunities we see ahead and our confidence in our ability to execute. Backed by a differentiated portfolio, growing customer demand, expanding supply capacity, and new addressable market opportunities, we are well-positioned to deliver sustained revenue growth, significant profitability expansion, and attractive returns for our owners over the coming years. Our new reporting segments - Optical Systems, Interconnects, Global Services, and Routing and Other - will align well with our growth markets and allow our owners improved insight into our financial performance." Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, Securities and Exchange Commission ("SEC") filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include the "Ciena’s three-year financial targets for fiscal 2029" section of this press release. Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our business and that of our customers, including their spending; the development and use of artificial intelligence and its impact on overall networking technology spending; our ability to execute our business and growth strategies; supply chain constraints or disruptions including increased costs and lead times; the introduction of new technologies by us or our competitors; the timing and size of customer orders, their delivery dates and our ability to fulfill and recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical tensions or events, and public health emergencies, epidemics, or pandemics; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; cyberattacks, data breaches or other security incidents involving our enterprise network environment or our products; regulatory changes, litigation involving our intellectual property or government investigations; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including its Annual Report on Form 10-K filed with the SEC on December 12, 2025 and included in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2026 filed with the SEC on September 3, 2026. Ciena assumes no obligation to update any forward-looking information included in this press release. With respect to Ciena’s expectations under "Ciena’s three-year financial targets for fiscal 2029" above, Ciena is not able to provide a quantitative reconciliation of the adjusted (non-GAAP) gross margin, adjusted (non-GAAP) operating expense, and adjusted (non-GAAP) operating margin guidance measures to the corresponding gross margin, operating expense, and operating margin GAAP measures without unreasonable efforts. Ciena cannot provide meaningful estimates of the non-recurring charges and credits excluded from these non-GAAP measures due to the forward-looking nature of these estimates and their inherent variability and uncertainty. For the same reasons, Ciena is unable to address the probable significance of the unavailable information. View source version on businesswire.com: https://www.businesswire.com/news/home/20260916287649/en/ Contacts Press Contact:Jamie MoodyCiena Corporation+1 (410) [email protected] Investor Contact:Gregg LampfCiena Corporation+1 (410) [email protected]

Ciena surged 5% Friday to erase its post-earnings selloff, with Arista Networks also gaining 5% as money rotated into networking equipment as a group. IYW gained just 2% and SPY 1% while networking stocks surged 4-5%, confirming the move as a targeted sector rotation, not a broad tech rally. Ciena's 10.7% weekly gain makes it the group's swing name, where the post-earnings gap is nearly filled and further upside requires fresh buyers or a new catalyst. Just released. Our analysts combed the entire stock market and named the ten best stocks to buy right now, and Cisco Systems didn't make the cut. Enter your email to see the names that beat CSCO. The report is free. Enter your email and see if any of your stocks made the cut. Ciena (NYSE:CIEN) stock is up 5% to $351.38 in early Friday afternoon trading, extending a rebound that's now stretched across the full week. The move reverses the post-earnings selloff that followed Ciena's September 3 fiscal third quarter release. Today's advance has effectively closed the door on the initial negative reaction to the report and pushed the stock back through the level it held before the release. The bid extends well beyond Ciena today. Arista (NYSE:ANET) stock is up 5% to $197.84, and Cisco (NASDAQ:CSCO) stock is up 4% to $111.53. All three networking names are climbing by a multiple of the broader sector's move, and each is doing so on the same session without individual company news to explain it. The wider technology sector is trading much calmer than the networking group. The iShares U.S. Technology ETF (NYSEARCA:IYW) is up 1.5%, and the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 1%. Buyers are giving an extra boost to certain networking equipment stock rather than massively sweeping technology and large-cap indexes as a whole. Free Report, Just Released Why Didn't CSCO Make The Top 10 List? 24/7 Wall St has helped investors make money for over two decades, and our top analysts just finished ranking the definitive Top 10 Stocks To Buy Now. Not the ten biggest companies. Not the ten everyone is arguing about. The ten best stocks to buy right now. And CSCO didn't make the cut! The report is free, and you can see why we think each stock is a top investment today. Enter Your Email and See the Ten → No company announcement, contract award, guidance revision or regulatory decision was published by Ciena this session to explain the same-day move. The pattern across Ciena, Arista and Cisco reads like money rotating into the transport and switching layer as a group rather than a single-name catalyst. Each of the three covers a distinct slice of that stack, and today's session is treating them together in a way that hasn't been true every week this quarter. Ciena supplies the optical transport equipment that carries traffic between and inside data centers, Arista supplies the switching layer above it, and Cisco supplies networking equipment across both enterprise and service provider customers, the same infrastructure layer we mapped out in a free report on seven AI buildout suppliers that aren't chipmakers. The gap between the group's move and the sector fund's move makes today look like a real rotation, since Ciena, Arista and Cisco are each running well ahead of IYW and SPY. That framing puts the day's story on infrastructure demand rather than on any one company's balance sheet. What separates Ciena from Arista and Cisco right now is the week rather than the day. Ciena stock had the most ground to make up after its fiscal third quarter release, and Friday's climb has taken the stock to a 10.7% gain since last Friday. Arista stock and Cisco stock are running nearly as hard today without a comparable setback behind them. That difference shapes how the day reads for CIEN shareholders. The recovery has already carried Ciena stock past most of the ground it lost after the earnings release, and further upside from here would need buyers who haven't chased the group yet or a fresh catalyst that draws in longer-duration capital. Ciena's setup now reads as a decision point for anyone who sat out the initial bounce, since the easy part of the gap has already filled. For Arista and Cisco, the story is simpler. Both stocks are climbing on the group bid without an earnings hangover to work through, so today's move looks like fresh momentum rather than a recovery. The open question is whether the two can carry the group's leadership if Ciena stock's post-earnings gap finishes closing before Monday. The key tell into Friday's close is whether Ciena, Arista and Cisco shares all hold their gains into the bell. A firm close across the three would frame the narrow networking bid as a genuine rotation rather than an intraday burst. A softer finish for Arista or Cisco could pull Ciena stock's rebound back before next week begins. Traders can watch for whether the group's leadership carries into next week's action or fades once Ciena's earnings gap fully closes. Your networking-stock exposure could stay measured until that leadership holds through a second session at the same intensity, since two consecutive sessions of outsized moves would carry a different weight than a single afternoon. For now, Ciena stock remains the swing name in this group. The stock has both the freshest scar and the strongest week behind it, so its behavior over the next few sessions may set the tone for how the rotation is priced across Arista and Cisco. Arista stock and Cisco stock can follow the leadership, and their charts look cleaner, though CIEN is the one carrying the recovery story into next week and the one in which the risk-and-reward gap looks widest. If you have cash sitting in your account right now, give this two minutes. After more than two decades of helping investors beat the market, our top analysts at 24/7 Wall St. put together a definitive report on the Top 10 Stocks To Buy Today. And CSCO wasn't one of them. They combed the entire market. It's not 10 ideas, not 10 stocks everyone is talking about, it's what their research points to as the 10 best stocks to buy right now, and it's free. Read more here and >;elm:context_link;itc:0;sec:content-canvas" data-yga="{"yLinkElement":"context_link","yModuleName":"content-canvas","yLinkText":"see which stocks made the list -->"}" class="link ">see which stocks made the list -->> Contact [email protected] for any questions or corrections.

Image source: The Motley Fool. Thursday, Sept. 3, 2026 at 8:30 a.m. ET President and CEO - Gary Smith CFO - Marc D. Graff Vice President, Investor Relations - Gregg Lampf Executive Advisor - Scott McFeely Operator: Hello, everyone. Thank you for joining us, and welcome to the Ciena Fiscal Q3 26 Financial Results Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press 1. To raise your hand. To withdraw your question, press 1 again. I will now hand the conference over to Gregg Lampf, Vice President, Investor Relations. Gregg, please go ahead. Gregg Lampf: Thank you, Jennifer. Good morning, and welcome to Ciena's 26 fiscal third quarter conference call. On the call today is Gary Smith, President and CEO and Marc D. Graff, CFO. Scott McFeely, Executive Advisor, is also with us for Q and A. In addition to this call and the press release, we have posted to the Investors section of our website an accompanying investor presentation that reflects this discussion as well as certain highlighted items from the quarter. Our comments today speak to our recent performance, our views on current market dynamics and drivers of our business, as well as a discussion of our financial outlook. Today's discussion includes certain adjusted or non GAAP measures of Ciena's results of operations. A reconciliation of these non GAAP measures to our GAAP results is included in today's release. Before turning the call over to Gary, I will remind you that during this call, we will be making certain forward looking statements. Such statements, including our quarterly and annual guidance, commentary on market dynamics and discussion of our opportunities and strategy, are based on current expectations, forecasts, and assumptions regarding the company and its markets. Which include risks and uncertainties, that could cause actual results to differ materially from the statements discussed today. Assumptions relating to our outlook whether mentioned on this call or included in the investor presentation that we posted earlier today, are an important part of such forward looking statements, and we encourage you to consider them. Our forward looking statements should also be viewed in the context of the risk factors Detailed in our most recent 10 ks and our forthcoming 10 Q. Ciena assumes no obligation to update the information discussed in this call whether as a result of new information, future events or otherwise. As always, we will allow for as much Q&A as possible today, though we ask that you limit yourselves to 1 question and 1 follow-up. I will hand the call over to Gary. Gary Smith: Gregg, and good morning, everybody. Today, we reported record financial results across the board. That we demonstrated outstanding third quarter performance including revenues of $1.7 billion another quarterly record and up 37% year on year. Adjusted operating margin of 22.5%, exceeding guidance was more than doubling year on year and the highest ever achieved for the company. Our adjusted earnings per share were up 215% year on year to a record $2.11. We delivered results in the context of an extraordinary industry demand environment. That continues to accelerate We continue to see strong momentum in customer demand and order flow. With a Q3 book to bill ratio that was significantly greater than 1 which resulted in a substantial quarterly increase in our backlog. And we also expect backlog to grow at an even greater rate in Q4. In fact, just 1 quarter sorry, 1 month into this quarter, we are approaching a level of orders booked equal to the entirety of Q3. As a result, we are currently projecting to exit fiscal 26 with over $10 billion in backlog. Overall, our outstanding Q3 performance reflects Ciena's essential role in the fundamental re architecting of network infrastructure. And looking at these industry dynamics, I would remind everybody that we remain in the very early stage of a multiyear highly durable, network investment era. This is spring boarding off and caused by the large and growing investments in data center infrastructure. AI is starting to build on the previous eras of communications. Including those driven first by the Internet and then by the cloud. But it is doing so at a massive scale. As a result, AI is currently driving and will continue to drive significant increases in both bandwidth connectivity demand, and network traffic growth. In that context, high speed, low latency optical connectivity has become a critical enabler to not only operationalizing the AI driven investment in the network, and the data center but also monetizing those investments over time. And because of the increasing demands for higher capacity, fast speed, greater density, improved reliability, reduced space, and lower power and cost. Optics, have become the indispensable element for next generation AI architectures. And this is manifesting across all 3 of our primary markets. First, you call it the traditional network or the wide area network, the WAN. Encompasses the network backbone, network edge, and network operations. It includes optical connectivity for long haul, subsea, metro, regional, applications that people are familiar with. And it is also being impacted by AI in a number of ways. From challenges of fiber availability in the backbone to quality of service demands at the edge. To the requirements of automation, to address the increasing complexity of network operations. Second is a market that we are referring to as AI WAN. It includes both data center interconnect or DCI for the WAN backbone, and scale across. Currently used for distributed training, across data centers and subsequently to be used for inferencing. Here, the fundamental challenges are related to power, caused by the increasing GPU compute capacity and energy load required to train large language models at scale. And the high volume, low price demands of deploying modems at much greater scale. The third is, of course, the data centers themselves. Which includes the fabric connectivity domains of scale up and scale out as well as data center operations. And as AI continues to drive up the data rate, and bandwidth requirements inside the data center, new optical technologies and applications are required to provide the needed improvements in capacity and density for short reach low power, connections. Given the acceleration and projected increase in the compounding waves of spend on network infrastructure across these markets. We continue to believe that the total addressable market for our business will effectively double over the next 3 years. Growing from approximately $25 billion to approximately $50 billion by 2029. Moreover, given our growing competitive advantages, we expect our share of that TAM to continue to increase over that timeframe. More specifically, Ciena's long established technology leadership in optical networking, positions us to capture a growing share of wallet, as optical connectivity expands its role throughout the WAN, and inside the data center. Across generations of coherent technology, Ciena's first to market benchmarks have set the bar for the industry, and continue to do so. Ciena was the first to commercialize coherent optics decades ago. And we continue to lead the industry in optical innovation, backed by very focused R&D deep expertise, and proven deployment at scale. Moving forward, performance gains will increasingly depend on precisely these capabilities. Because of our leadership position and value proposition, we have developed a high degree of competitive differentiation across our portfolio. With the clearest proof being the customer adoption that we are seeing across our portfolio in each of the primary market segments. So starting with both the traditional WAN market, as I outlined, and the AI WAN. Today's market dynamics are driving higher adoption rates for our WaveLogic 6 Extreme platform. Which after 18 months is still the only 1.6 terabit high performance modem on the market today. Notably, its ramp has already exceeded that of our prior generation WaveLogic 5 e. Separately, customer adoption and scaling of our intelligent line systems remains exceptionally strong. RLS is basically the industry standard in disaggregated line systems. Where Ciena's first mover advantage has driven a leading installed base where roughly we have 70% market share. In addition to serving cloud providers and service providers in the network backbone, and cloud providers for DCI and the AI WAN, RLS is the industry's first system deployed for scale across applications. And the next generation of RLS, Hyper-Rail, is our second generation of RLS. And represents our 6th generation of photonic line systems leadership. Co created with the hyperscalers, it dramatically increases the density of existing optical amplifier infrastructure and as such, is purpose built to address the needs to distribute AI training workloads in data centers across greater distances. With customer orders ramping, we remain on track for initial customer standardization for RLS Hyper Rail by the end of 26. And scaling to material revenue as we move throughout 2027. Turning to our interconnects portfolio. We are applying our optical leadership to a growing portfolio of connect solutions that address surging bandwidth demands inside and around the data center and the performance limitations, of course, of today's short reach technologies. Starting with our WaveLogic 5 nano pluggable optics, we are seeing strong market adoption as we continue to ramp into production volume. In fact, in Q3, we shipped more than twice the volume of 800 ZR plugs than in the previous quarter. In addition, during the quarter, we made strong progress with the components portion of our interconnects portfolio. We are seeing strong market receptivity to nitro, our linear redriver for active copper cable solutions. And I am pleased to report that we received sample orders from several anchor customers in the ecosystem. Ecosystem for Vesta, our open co packaged optical or CPX solution. This represents another important step towards the commercialization of our open ecosystem approach towards short reach data center optics. And we believe this is gaining meaningful industry momentum. Most importantly, with potential customers. As any new growth sector has, CPX business will continue to strengthen over time, with revenue expected to begin in 2027 and ramping into 2028. And finally, it is worth noting that last quarter, we announced a significant win with a major hyperscaler that integrates our WaveLogic 6 coherent technology into their own platform. This solution goes well beyond the modem, and combines our DSP, drivers, TIAs, and coherent expertise into a complete module. That will be deployed broadly across the customer's global optical network, via their own optical platform. I think this win demonstrates our ability to deliver for our customers across multiple consumption models. With our best in class portfolio, and this represents a significant takeaway from a component competitor. At the highest level, the current and future waves of AI driven demands on bandwidth and network traffic will require industry leading high speed optical connectivity. We remain focused on managing the business with this long term view supported by durable demand a broad set of co creation opportunities and customer design wins, robust orders, and a backlog that extends well into fiscal 28. Looking forward, the strength of our market position and the breadth of our portfolio provide us with growing confidence and visibility into a multiyear runway of growth. Operating leverage, and increasing profitability. As a result, and to add to this level of confidence, we recently secured a significant increase in customer commitments that extend through 2029. At the same time, as Marc will discuss in a few moments, we have also secured incremental supply capacity for critical component optical components to service that multi year demand. So in summary, Ciena's unmatched combination of leading optical technologies incumbency, portfolio breadth and deep expertise across systems, components, software, and services, gives us a powerful and sustainable competitive advantage. And really is the only pure play optical systems and interconnects vendor operating at scale, we are uniquely positioned to convert driven demand into durable top line growth, with increasing operating leverage and earnings power over multiple years, delivering differentiated value for our customers and our shareholders. With that, I will hand the call over to Marc for an update on our financials, and our outlook. Marc D. Graff: Thank you, Gary, and good morning, everyone. As Gary just discussed, our focus is on delivering strong financial performance while ensuring security of supply and manufacturing capacity necessary to support the significant multiyear demand in front of us. Within that context, continue to make excellent progress against our 3 financial priorities. First, let me discuss our progress on gross margin. We achieved 46.4% adjusted gross this quarter, which was positively impacted by the treatment of tariff refunds by about 70 basis points. Even without the tariff impact, gross margin achieved the top end of guidance, reflecting disciplined cost execution, favorable mix, and pricing discipline. Our midterm goal is to structurally position the company to achieve mid-40s gross margins. With our results over the past several quarters, we are confident that we have reset our margin baseline to this mid-40s goal. But as we have said over the past year, the mid forties goal was a waypoint. Not the final destination. We have the cost structure and leadership portfolio to expand gross margins further over the next few years. Second, as we balance the investments to support the growth of our business, working capital remains a focus. While our cash conversion has taken a step back quarter on quarter, the overall trend is positive relative to the year ago results. We have invested working capital to support slightly higher inventory levels and to increase revenue through the quarter. Even with these investments, we have generated $116 million in free cash flow. Third is capital allocation. We continue to take meaningful steps to improve the operational and financial efficiency of the business. Our June convertible debt issuance achieved 2 specific goals. First, it lowered our cost of capital with a 5-year zero coupon instrument at an economic conversion premium of 114%. From which we retired our 5.5% interest term loan. Second, it provided the capital to help secure supply over the next 3 years. We maintain strategic flexibility as a result and have $2.8 billion in cash and equivalents at the end of Q3. Our capital investments this year have increased capacity sufficient to support RLS plug and WAV server revenue growth all over 60% year to date. Additionally, we continue to return capital to our shareholders in Q3. We repurchased 356 thousand shares for an aggregate price of $172 million reflecting the acceleration associated with the convert deal. Lastly, we expect to be on the high end of our capital expenditure range of $250 to $275 million. Now let's move to the quarterly results in more detail. As Gary noted in his opening remarks, revenue achieved $1.67 billion at the TEP top end of our guidance an increase of 37% year on year and another quarterly record. Our total combined optical networks revenue including interconnects, grew over 45% year on year supported by over 55% growth for both our RLS and WAV server systems. Our interconnects more than doubled year on year while our direct cloud provider revenue grew over 80%. Our in and around the data center percent of revenue has quadrupled year to date, well ahead of our committed 3x growth from the beginning of the year. We had 2 customers that each contributed more than 10% of revenue, And lastly, we exited Q3 with an $800 million increase in backlog, to $8.5 billion Orders continue to accelerate as Gary noted, 1 month into the quarter, we have booked nearly as much demand as all of Q3, and expect to end the year with more than $10 billion in backlog. As I noted earlier, adjusted gross margin was 46.4%, exceeding the top end of our guidance by 90 basis points and up 450 basis points year on year. Q3 adjusted operating expense was $400 million coming in at the low end of our guide and driving a record adjusted operating margin of 22.5%. 250 basis points over our guide and more than doubling the year ago result. Adjusted EPS reached $2.11 more than triple the year ago figure and achieving a new record level for the company. Now let's move to guidance for the last quarter of the year. In Q4 26, we expect to deliver of $1.75 billion plus or minus $50 million, raising the full year midpoint to $6.42 billion, up $120 million from last quarter. With this revenue guide, we expect to increase our market share in the combined optical systems and plug market by about 4 points to approximately 30%. We expect adjusted gross margins of 45% plus or minus 50 basis points, bringing the year to a similar range a raise of 50 basis points from last quarter. Adjusted operating expense will be roughly $415 million plus or minus $10 million, with our annual OpEx at 1.6, slightly down from the June guide. All told, we expect to drive an adjusted operating margin of approximately 20% plus or minus 50 basis points, bringing the full year to between 20-21% and exceeding the 20% annual figure for the first time in the company's history. Now let me address the topic of supply more closely. Gary described an unprecedented durable demand environment with backlog now into 2028. To ensure our ability to service this demand, we have taken decisive steps to strengthen our supply security and to increase our output. In recent weeks, we finalized long term agreements that secure supply of certain key components through 2029, including incremental capacity for those key components that will enable us to support growing customer demand. This extends the investments we have made for this year to drive 35% revenue growth. We continue to invest upstream to drive security of supply to meet and eventually bring into balance the demand backlog. As a result, we expect to see a reduction in cash from cash from operations in Q4 as investments are dispersed to support these agreements. At the same time, we continue to make progress in the value exchange discussions with our customers. In addition to price discussions, these conversations are increasingly focused on the alignment of various demand terms and conditions with the capacity required to support them. With this ongoing momentum and improved visibility into future demand, we believe it is prudent to provide early direction for fiscal 27. As we see it today, we expect to deliver another record year with revenue growing a minimum of 30% year on year yielding at least $8.3 billion to $8.4 billion in revenue. With supply driven upsides, Our investments in capacity and supply allow us to accelerate absolute revenue growth from 2025 to 2026 and now into 2027. At these levels, we expect to again increase our market share in optical systems and plugs, in fiscal 27. We expect gross margins to be at least between 45-46%. And we expect to achieve fiscal 27 adjusted operating margin between 25-27% posting yet another record in profitability and serving as yet another proof point for the earnings potential of Ciena's model. Again, this is our preliminary view of 2027, and we will provide an update when we report our Q4 results in December. In the interim, we look forward to continuing the dialogue in a few weeks time at Ottawa, at our Investor Forum, the content from which will be posted on our Investor website afterwards. Closeout Q3 was a testament to the strength of Ciena's technology leadership, customer engagements, and supply resiliency in the face of unprecedented multiyear demand. The execution of our business model has driven an acceleration of our earnings in Q3 in 2026, and we now believe into 2027 and beyond. With that, operator, we will now take questions from our sell side analysts. Operator: Thank you. We will now begin the question-and-answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your 1st question comes from the line of George Notter with Wolfe Research. Your line is open. Please go ahead. George Notter: Hi, guys. Thanks very much for the question. I guess I and congrats on the on the terrific results here. I guess I wanted to start just by you mentioned value exchange on the call. You know, certainly, I think you mentioned prices as well as alignment of demand terms and conditions. Could you just talk a little bit more about what is going on there? Any sense for what price increases might look like? Any sense for what terms and conditions might be looking like in terms of the context of value chain exchange? Thanks. Marc D. Graff: Yeah. Hey, George. it is Marc. Thanks for the question. You know, I will I will take it kind of in 2 parts. On the pricing piece, we have had conversations with you know, customers across different product lines. And, you know, we have gotten to a space where we would expect, depending on the and the product line, anywhere between call it high single digits types of price increases to something in the range of high teens, low twenties type of price increases. And what is remarkable, and I think you will appreciate this, George, is, you know, some of that will selectively hit backlog. So, I think we have made really good really good progress there. The second pillar in terms of conditions is really a 2-way discussion. You know, the first is we are on the hook to make sure that we deliver what we say we are going to deliver, but, you know, we expect the reciprocity of that from the customer side. As well. And so we have we have we have covered those aspects. You know, we have we have talked a little bit about payment terms. We have talked a little bit about, you know, fill rates and things like that. So we are trying to make it a pretty holistic conversation in terms of that value exchange. And not just have a conversation about price. Because just like we are looking for supply security, our customers are looking for supply security from us as well. And it is something that we feel pretty confident that with these supply agreements, that we can, you know, that we can fulfill. George Notter: Got it. Super. And then, know, I know that there were some price increases. I think earlier in the year, last year, just around tariffs. Is that something that is flowing into the model now? I know that in the past, you guys were not you know, you were you were not repricing backlog certainly. But is that something that is helping the gross margin now? Is any sense there? Thanks. Marc D. Graff: Yeah. it is a real again, this is Marc again, George. it is it is relatively neutral. You know, we are we are not putting margin on top of tariffs. Right? If we if we get $10 of tariffs, we kind of pass on that $10 of tariffs. What we saw in Q1 was kind of a--or I am sorry. In Q3, was kind of a 1 time accounting adjustment for those tariff refunds that we do not expect to continue moving forward, and that gave us about 70 points, 70 basis points of uplift. Moving forward, I would say the tariff impact again, under today's current regime, is relatively neutral. We are monitoring pretty closely some of the impacts that are coming out of the new Canadian tariff regime, that could have an impact of, call it, $10-ish million dollars a quarter. Again, we are still trying to work through the mitigation actions that we have got associated with that. George Notter: Super. I will pass it on. Thanks a lot, guys. Gary Smith: Yep. Thanks, George. Operator: Your next question comes from the line of Tal Liani with Bank of America. Your line is open. Please go ahead. Tal Liani: Hello. Good morning. Gary Smith: Gary, if I told you 3 years ago that you are going to grow 30%-- you hear me? Yes. I can hear you loud and clear. Yeah. Perfect. Tal Liani: Perfect. If I told you 3 years ago you are gonna grow 30% with 26% margin, you would have asked to drink the same thing I am drinking. So, the question I have is about backlog. So your backlog is doubling this year. And, it grows even faster than revenues. Your revenues are growing fast, and it grows even faster than revenues. I am trying to understand the early ordering portion of the backlog the maybe customers are buying ahead just because of supply constraints. I am I am not it is not a concern. I am just I just want to understand kind of get understanding of how backlog could behave in 2027. that is the reason for my question. Gary Smith: Okay. I think it is almost entirely just driven by a function of lead times. You know, the demand is absolutely there. And, you know, just to just sort of illustrate that, you know, Marc gave an early indication of what we think our guidance is for the year as just an early direction indication for next year, it would be greater than that if supply was greater. I mean, that sort of, you know, I think summarizes it. We have got, you know, we think at least a $10 billion backlog as we leave this year, And in the midpoint of what Marc was talking about, you are looking at revenues of 8.3, 8.4 as a sort of a baseline for us for next year. It would be greater than that if we had more supply. And so, you know, the demand is absolutely there. You look at our installation services, they are up you know, 35% for the year. And as soon as we can ship it, it is installed and carrying traffic. Yeah. Marc D. Graff: Hey, Tal. Maybe I will I will just add, you know, maybe a little bit more context here. You know, if you look back all the way back to 2024, our orders, you know, call that demand, doubled from 2024 to 25. From 2025 to 2026, we are expecting another 50% increase. And as you rightly noted, backlog is doubling across all 3 of those years. From 2024 to 2025 was a double, from 2025 to 2026 is a double. And so what we are really, you know, constrained with is the industry needs to add a significant amount of capacity to keep up with that demand. And so we think it is gonna be a multiyear journey before we see that supply and demand gets back into balance. And yeah. Multiyear, so we do not see that happening you before 2028 at all. So I think you will see a very similar constrained dynamic going into 2027 and likely into 2028. Tal Liani: Got it. And any if I can just ask a follow-up, any color on customer composition, meaning hyperscalers, I understand. What about smaller hyperscalers? Meaning, new clouds and new like Oracle. So without names of customers, but can you discuss your ability to kind of grow the customer list over time, and where is the demand? Gary Smith: Yeah. You would be you know, about 50% of our business is now hyperscalers, directly. But increasingly, I think to your point, we are seeing this sort of neo scalars, umbrella of neo scalars, which covers know, multitude of different business models, etcetera. We are very focused on that space. They are leaning very much into networking now. And they are securing networks on MOFN deals, They are beginning to put their own fiber in when they can get it. And we are taking more than our fair share of that market as it grows. So we are very focused on addressing that market both in The US and globally. We are seeing that in certain parts of the world where these neoscalers are, investing in the networking. So I think as we go through 2027 and 2028, that will become an increasingly important part of our business. Got it. Thank you. Thanks, Tal. Operator: Your next question comes from the line of Meta Marshall with Morgan Stanley. Your line is open. Please go ahead. Meta Marshall: Great. Thanks. A couple of questions. Maybe just following up on George's question. Just in terms of some of these newer arrangements that you guys are having with or discussions that you are having with customers, if some of those are some of those pricing adjustments dependent on timeline of delivery? Like, in terms of, if you can deliver 6 months earlier, you can capture, you know, high single digits versus a mid single digit price adjustment. Just trying to get a sense of whether there is any kind of escalators in there And then second question, just as you guys look to assure more supply, have you qualified additional suppliers at this point, or is this largely reaching long term agreements with existing suppliers? Thanks. Marc D. Graff: Yeah. Thanks, Meta. it is Marc. On your 1st question in terms of escalators, we really have not built those in. The price increases that we have talked about are not performance based per se. They will cut in, you know, as more and more backlog from those orders becomes a bigger part of our revenue. So I would I would not say that it is, you know, performance related. Once we agree to those to those price increases, it is it is really around, you know, when we deliver it, they will pay for it. In terms of qualifying new suppliers, yes, that is part of our supply resiliency strategy that we are driving. You know, we have got, you know, our typical, providers that are in the stable that you know of very well, but we are looking at expanding you know, both the types the numbers of suppliers that we have, as well as, you know, we are we are constantly looking at new technologies to satisfy the same type of functionality. So we are taking both, you know, quantity as well as technology perspective to our supply chain. Meta Marshall: Great. Thanks. Gary Smith: Thank you. Operator: Your next question comes from the line of Jeff Cocci with JPMorgan. Your line is open. Please go ahead. Analyst: Hi. Good morning, and I will share my congrats as well on the results and guidance here. And thanks for the question. Maybe another backlog question and more on the composition of it. As we think about the portfolio offerings that you guys have and maybe the raw irons in the fire that you guys are trying to address, Where are you seeing the strong demand inflection as we are entering the back half of the fiscal year? And then the second part to that, it is great to hear that you are seeing visibility now into 2028. But any color you can provide on the weighting of orders coming in for 2027 versus 2028? You know, essentially, just trying to get a better understanding of how much of 2027 is already covered versus what is building for 2028 now. And then I have a follow-up. Thank you. Gary Smith: So the first part of that question, Joe, is really we are seeing broad demand across the portfolio. And you would say characterized as being line systems both in terms of the existing RLS and hyper-Rail. We have got a number of new wins Hyper-Rail that we are beginning to-- will begin to ramp up during, 2027. So there is a lot of infrastructure going in for that. I mean, I think scale across not entirely, but predominantly, you know, the deployments for that is driving it. And then on the modem side, you know, we shared some of the statistics that you are seeing for WaveLogic 6. You know, we doubled output. it is already, you know, at this point, exceeding 5e. In terms of its, adoption. And I think that, again, just talks to you know, the need for high speed distance, you know, for these kinds of applications. So we are seeing it on the modem side. And, of course, we are seeing it on the on the infrastructure of line systems. Also seeing that both in terms of MOFN deals, globally as well to support this expansion. Particularly markets like India, and The Middle East. And certain parts of Asia where the hyper calers are leaning into provisioning of extension of their networks. Submarine as well, you know, massive build outs going on across the global submarine market where we have the number 1 market share in the world. So, you know, we are we are seeing that. We are seeing that across it. Joe. And in terms of the profile of the backlog, we have got, as you said, we probably have about 10 billion plus backlog as we go into 2027. We cannot satisfy basically all of the requirements that they would take to deliver all of that in 2027. Joseph, the vast the vast majority of that $10 billion comes with a customer request date that is actually in 2027, meaning that they would take it if we could give it to your question, Backlog covers most of the 2027 guide. Got it. that is that is exactly what I was getting at with that. So thanks for the color there. Thanks, Joe. Operator: Your next question comes from the line of Ruben Roy with Stifel. Your line is open. Please go ahead. Ruben Roy: Yes. Thank you. Gary, for the 1st question, I wanted to maybe drill into the Performance Optics discussion and sort of the consumption model that compared to the systems model. Can you is that a bespoke arrangement with 1 customer? Are you productizing this consumption model as you go forward? And I guess, you know, as you think about that longer term, and, you know, how that sits in the interconnect family, if you could talk a little bit about the margin structure as that consumption model starts to build? Thank you. Scott McFeely: Hey, everyone. it is it is it is Scott. So first of all, ask the question from 2 different angles or else how I heard it anyways. So first of all, the performance modem portfolio, you know, they with the extreme family, if you like, WaveLogic 5 and then WaveLogic 6. Is obviously you know, a very broadly deployed solution within our systems business. So we have a lot of deployments out there on Extreme modems. This specific opportunity you are referring to, though, of taking that and offering it up in a different consumption model. Is bespoke relationships with individual customers. We have 2 examples of that today. 1 that was recent announcement last quarter, it is certainly something that we do not shy away from. You know, we have made the technology available however our customers wanna consume it. But in most examples, those are very unique in terms of how those customers want to deploy them. So they are kind of custom development for them. And, you know, the relationship we have with those customers reflects that. Ruben Roy: Okay. Thank you, Scott. And then as a quick follow-up for Marc, Sorry if I missed this, Marc. But with the 25% to 27% operating margin, guidance for 2027 or first look at 2027 that implies, I think, roughly flat to maybe up a little bit, operating expenses. If you could just walk us through sort of the mechanics around operating expense as you look out in the fiscal 2027, that would be helpful. Thank you. Marc D. Graff: Yeah. No problem, Ruben. You know, we have not really closed in yet. We are we are kinda in the middle of our annual planning process. You know, the puts and takes that you should kind of be thinking about is you know, this year, we will spend roughly, call it, you know, 1.6 billion. Keep in mind that billion 6 includes a bunch of onetime variable compensation dollars that yeah. A year ago, we were telling you it was gonna be about 1.5 billion. We are at 1.6 billion mostly because of that variable comp. We are gonna reinvest that 1 time. So that is when you say it is about flat, you know, All the folks sitting around the table here are looking at a $100 million more of investment that they get, you know, regardless of the performance of the company. So we are we are reinvesting those onetime things. And I think you will also see there will be a little bit more, investment in some of the activities, particularly around line systems as we continue to grow that business. And invest in our interconnect portfolio. Ruben Roy: Great. Thank you, Marc. Yes. You bet, Ruben. Operator: Your next question comes from the line of Ryan Koontz with Needham and Co. Your line is open. Please go ahead. Ryan Koontz: Great. Good morning. Thanks for the question. You know, in light of you know, some of the politics around data center construction and the like, which I know weighs on investor minds a lot and whips, you know, a lot of the broader sector around. How do you feel about the pace of catch up of your WAN projects relative to data center construction? Do you feel like you have got visibility independent of pacing of data centers in that light? Maybe you can comment on that, Gary. Gary Smith: Yeah. No. Listen, it is great topical question. I would say that as we talk to the hyperscalers and we talk about durability of demand and their long term view and the rest of it and getting long term agreements with them and commitments. So part of that, you know, 1 of the that was made to me, was basically that if they stopped building data centers tomorrow, Gary, you probably would not notice for 2 years. Meaning, they have already got these data centers out there, and they need and they are not going to strand, you know, the assets. And secondly, they have got data centers that they must increase the network capacity to. And so, you know, largely, what we have gotten back backlog here and what we have got visibility to going forward is really the data centers that are already there. And particularly, you have got a lot of international, expansion as well. And it is really the refresh of the GPUs in these data centers that are already there that require massive amounts of additional connectivity. And, you know, bear in mind, we have a unique insight into this because we have got number 1 market share in data center connectivity before all of this AI expansion began. So we have got the connection to most of the data centers around the world, a lot of what we are seeing is the expansion and increasing of that capacity and connectivity to enable, you know, the, refresh GPUs, etcetera. And you have also got all of the inference and AI stuff in front of us. So, you know, Ryan, certainly, the next couple of years, we think we are, you know, largely immune from what may or may not happen with the pacing of new data centers. that is great. Thank you for that. Ryan Koontz: And maybe my as a follow-up, any commentary on the product mix here? You know, as you have seen, like, in the most recent quarter or maybe recent bookings? Terms of shift of line systems versus pluggables and transponders, any commentary there? Marc D. Graff: Yeah. Maybe I will jump in another can add color, Brian. So, you know, as I as I think through what we have seen, you know, particularly over the last 12 months, I think we have seen our plugs and our line systems particularly RLS, really grow at much higher than corporate average growth rates. Right? I think I mentioned plugs and RLS, you know, together as part of our optical piece growing 45%. So you kinda see how that is becoming a bigger piece of the pie. 1 of the things that, you know, from a margin perspective that we are seeing is as our DCOM solution really starts to increase over the last year, that is really driven, you know, a pretty accretive, dynamic for us moving forward. We expect that to continue. And then, obviously, as we add, Hyper-Rail, that is gonna be another accretive motion for us. And so I think what you are seeing is the optical piece of our, of our portfolio really driving a bunch of the growth for the company. And then, obviously, we have got the DCOM piece, which is shown in route switch. You know, really in the in the early part of its ramp as well. Scott McFeely: I think, Ryan, I mean, a dynamic that is been going on since 2024. We are just seeing more and more demand for line systems, meaning more fibers are getting lit. And those are getting lit with coherent optics of all flavors whether, you know, whether it be plugs or performance optics consumed in WAV server. Know? And all those, to Marc's point, are up well north of the 35 or 37% that we are reporting as a corporate average. And that is gonna continue, we think, going into going into the foreseeable future. The R-S DCOM piece is a great adder, but it is a bit lumpy because of the concentration the customer. So from quarter to quarter, DCOM will come and go. But it is you know, it is a it is a net new ad for us. Ryan Koontz: that is great. Thanks so much. Thanks, Ryan. Operator: Your next question comes from the line of Timothy Long with Barclays. Your line is open. Please go ahead. Tim Long: Thank you. Appreciate it. 2 for me as well. Maybe first, if we could dig a little deeper into Hyper-Rail, mentioned it a few times here on the you know, value add side and ramp. Just kinda update us on, sounds like a few customers, but where are we in you know, in the demand profile and how quickly could we see the ramp of this product and kind of just remind us on the economics like, the more the RLS, prior generation. And then the follow-up would be on just the pure telco business, maybe ex Molson. If you could just talk a little bit about the durability of that business. In the past, that is been a little bit more cyclical. So just curious of the outlook on just the pure telco piece. Thanks. Gary Smith: Yeah. I will start on, Hyper-Rail, Timothy, and then others can jump in. You know, we are we are on track for, you know, getting that product to standardization by the end of, you know, this calendar year. And you will see the ramp starting in 2027. And that ramp in 2027 will be to several hundred million dollars. Right? So we are looking at that as a pretty meaningful, ramp for us. The back story on that is it could probably could be faster if we get more components. Right? So obviously, we are working day and night on that. From an economics perspective, relative to RLS, think the team's done a fantastic job of improving the margins over the last you know, 4 to 8 quarters on RLS you know, to get us to a pretty decent margin profile. Hyper-Rail will be a step function. On top of that. And, you know, with the size of the ramp and the opportunity that we think that is coming through with Hyper-Rail, and the economics of that, it is gonna be accretive to the company as a whole once we get into you know, 2027, 2028, 2029. So we are really looking forward to get to get Hyper-Rail out there. And I think our customers are placing, you know, quite a few orders, that is represented in that $10 billion backlog that we expect at the end of the year. Marc D. Graff: And on service provider growth, it is actually quite difficult to separate it from a lot of the MOFAN activity that is going on. Gary Smith: And we know the MOFN activity is high. But I would say there is 2 things going on with the service provider piece. 1, it is growing anyway because I think there is been underinvestment in infrastructure in the last 5 years. And, you know, you have got the service providers returning to, you know, drive out infrastructure for optical infrastructure. And you have also got this MOFN piece, you are seeing that phenomenon now certainly in North America. You know, if you go back about 18 months, it was very much an international phenomenon. But now with training and the rest of it, we are seeing that very much so in North America. And that is driving a lot of the particularly the wholesale market in The US and the wholesale carriers that specialize in that. We have seen very strong growth in that space. And we expect that to continue. Markets like India, particularly for MOFN, we are seeing explosive growth in provisioning of MOFN network for multiple hyper railers in places like India, Jason, I would also highlight and then certain parts of certain parts of The Middle East. So, you know, we expect to see good steady service provider growth continue over the next few years. Irrespective of the MOFN? Phenomenon. Marc D. Graff: You very much. Tim Long: Thank you. Operator: Your next question comes from the line of Simon Leopold with Raymond James. Your line is open. Please go ahead. Jeff Cocci: Hey. Thanks, guys. Jeff Cocci in for Simon. Really wanted to ask on 1st question on the software business. It does not really appear like the web-scale RLS deployments are a driver here. Is that kind of the right Is that because they have their own solutions? Into that? And, you know, like, how do you win the RLS deals if it is not like, you know, your like, a management a management platform type play? Thank you. Have a follow-up. Scott McFeely: Yeah. Jeff, Scott here. Can you hear us back? We can hear you. Yes. Thanks. Okay. Yeah. I mean, hypothesis that there is there is less off box software components in a, in a web-scale deal in general, not just an AI deal, is valid. that is that is a fair statement. However, having said that, to your second question, do not do not take that comment to mean that the only thing these guys are buying is merchant hardware from us because the value that they get is much broader than that. And whether it is submarine networks, they are they are existing backbone, their DCI networks, or their scale across networks. The statement is true across the pieces they are getting. You know, a yes. A hardware but some very sophisticated on box software capabilities that is embedded into their back office system. That has an awful lot of intelligence in it you know, protection mechanisms, etcetera to allow them to deliver to their SLAs They are getting planning tools and deployment tools. They are getting link engineering tools. They are getting a global across the world service capability to turn these things on pre preposition them, preconfigure them, and turn them on. A set of skills that we have developed with them and their relationships for more than a decade now. So it just because we are not selling, as much off box software components, the service providers do not conclude. Therefore, it is just a commodity hardware sale. it is it is far from that. Jeff Cocci: Great answer. So maybe just with that in mind, can you maybe give us a little bit of color on how the gross margins are for that business and maybe how they are changing just maybe even just relative to the average. Marc D. Graff: You are talking about the software? The off box software? Nope. I am really sorry. For the line systems for the line systems. Yeah. So, you know, as I said, previously with Timothy, you know, we have seen really good improvements in the RLS gross margins over the last you know, 2, 3 years. And, you know, I expect that to continue, and those are approaching what I would call the corporate average. You as we move into the next generation Hyper-Rail, rail, the economics get significantly better. Right? And so, those will be above the current corporate average, and I would expect know, with the with the size of opportunity that we have with Hyper-Rail over the next couple of years, that will be you know, accretive. Terrific. Terrific. Jeff Cocci: And then if I could just do another follow-up. On the interconnect business and really just inside the data center You know, we know that--we hear, like, Google's, you know, looking to deploy 2.4-terabit coherent light solution for CPUs. You know, maybe talk about are you in those deals? Are you being evaluated? Know, what is your take there? And what is your take on optical circuit switching? Is that a product that Ciena would explore? Thank you. Scott McFeely: Yeah. So a couple things. A couple questions there. The coherent moving inside the data center, we said for a long time now that we think that is a trend that is inevitable, and it is going to happen, and we are and we are committed to that. We absolutely believe in the coherent light market. We think the right intercept for that for the general market is at 3.2 terabits. And we think we will be in a great position to be a leader in that in that market. In terms of OCS, We love OCS just because it is part of the continuation of more optics inside the data center. And it will drive actually adoption of coherent inside that data center faster than, without OCS's in our belief system. So that is all good news. that is a separate answer whether or not we are gonna we are gonna jump into the OCS market ourselves and at the you know, we are not gonna comment on plans make any product announcements or that on the call today. Operator: We are going to move on to 1 last question. Last question comes from the line of Tim Savageaux with Northland Capital Markets. Your line is open. Please go ahead. Tim Savageaux: Hey. Good morning. And congrats on the results and especially the guide. that is kind of the focus of my question. Which is, you know, along several lines, the case for accelerating revenue growth in fiscal 27 looks particularly strong. Whether we are talking about anecdotal commentaries, backlog, hyper rail, scale across which will be my focus on my follow-up, And I know you sort of termed this as an initial guide but I would be interested in your commentary on the prospects for delivering accelerating revenue growth in fiscal 27. I know you mentioned supply as a constraint. And maybe what things might look like if that constraint were relaxed a bit. Marc D. Graff: Hey, Tim. it is Marc. I think you kind of answered your own question. You know, as we look at it and you are right. We are early. Right? And we would not do this. But, you know, as we look at the demand or the dynamics that we are seeing in the market, we thought it was prudent to give, you know, our owners and the investment community at least some initial thoughts on what we think the floor will be going into 2027. But as you rightly pointed out, you know, all of our focus right now is on how do we get more supply to get to, you know, to get more of that demand. And as Gary said, if and Scott said as well, you know, if we could get more demand, we would unwind that $10 billion of backlog faster. Right? And that, you know, that 3 to 4 that we talked about is the floor. You know, would be higher. And so, you know, from an absolute dollar terms, we think we are accelerating the growth from 24 to 25 to 26, and into 27. Excuse me. But it is it is really gonna be dependent on that supply. You know? And yeah, a year ago, when we did this for the first time, we said, you know, we thought 2026 would grow 17%, and here we are at 35%. Now I am not suggesting that my 30% in a year is gonna be 60%. Because we are in obviously a different supply environment. But, you know, we wanna make sure that we give you guys a floor make sure that we can achieve at least that number that we give you while we continue to work on supply. Tim Savageaux: Great. And as a quick follow-up, on scale across, I mean, to what extent is that you know, maybe even the primary driver of growth in 2027? And I would be interested in your reaction Some pretty extraordinary comments from suppliers and competitors about dynamics and scale across. I think Cisco talking about 14x the port count versus traditional DCI and some, pretty spectacular comments from Momentum as well. You know, maybe we can sharpen the focus on the scale across opportunity, how you see that TAM having maybe increased in recent quarters? And, thanks again. Gary Smith: Yeah. Timothy, I think it is a, you know, it is a major driver of demand. And we were the first out there with the first scale across piece that came out of the came out of the data center, we have got good visibility to it. I concur with most of the industry comments that is gone on to it. I think it is you know, excuse the pun. It is at a massive scale, and it is just beginning. that is the point I would make is, you know, we are just beginning to roll out the first connectivity between these data centers. It is almost entirely North American, US based. And we are just beginning to link the first few data centers for a couple of hyperscalers to it. And that is all in front of us. So, yeah, it is a massive driver to it. But I also you know, we are also saying, you know, the general increase in connectivity around the data centers as well. The agentic stuff's beginning to flow, particularly on the submarine cables. And, you know, the inference traffic, we also think, you know, is a big step function. It mainly in front of us. So, everywhere you look, basically, Timothy, you know, you are looking at compounding waves of applications and traffic growth. That will just build on top of each other. Because even the scale across which is really predominantly now on training, started off with synchronous training. You are going to get asynchronous training as well. You are also gonna get large amounts of inference cascading into that as well. So, you know, massive amounts of connectivity these data centers in front of us. And we are only just at the early innings of that. And we are incredibly well positioned to it having the leading platform for, HyperRail. You know, RLS was an industry standard. We have about 70% of that market share, and we expect that, you know, to continue. With Hyper-Rail in this next generation and the leading modem technology we can basically move bits faster and longer than anybody else in the world. And that is a super valued, critical element that will enable this. Thanks, Timothy, for the question. Thanks, Gary. Gregg Lampf: We look forward to seeing everyone over the next several weeks. We have a very busy schedule. Thanks for your time this morning. Operator: This concludes today's call. You for attending. You may now disconnect. Before you buy stock in Ciena, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ciena wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $414,015!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,385,459!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of September 9, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Ciena. The Motley Fool has a disclosure policy. Ciena (CIEN) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Ciena (CIEN) just delivered one of its strongest quarters ever. Then the stock fell hard anyway. That contrast has left many investors unsure of what to do next. Citigroup has now stepped in with a call that stands out from other analysts, pointing to a much higher share price. Here is what the bank sees, why the stock dropped, and what it means for you. Citi reiterated a $658 price target on Ciena and kept its Buy rating. That is about 105% above its recent $321 close. The bank called the post-earnings selloff a buying chance, according to CNBC. Atif Malik, Citi’s managing director leading its semiconductor and networking coverage, sees further gains ahead. More AI networking stocks: Wall Street sees nearly 40% upside for one AI chip giant Marvell has a $120 billion Google deal, so why did the stock plunge? Marvell stock fell 10%, but Morgan Stanley still likes it Malik framed Ciena’s 30% growth guidance as “a floor that will move higher with increased supply.” His case rests on two things: Ciena’s lead in optical transport gear, and a new wave of demand from AI data centers. Ciena builds the high-speed optical equipment that moves data between data centers and across long distances. AI has made that equipment more valuable, since AI clusters in separate buildings must move huge volumes of data at high speed. Its fiscal third quarter was a record. Revenue rose 37% to $1.67 billion, and adjusted earnings jumped 215% to $2.11 a share, Ciena reported. Ciena also raised full-year revenue guidance to $6.42 billion. Direct cloud revenue climbed more than 80%, and its order backlog grew to $8.5 billion, heading toward $10 billion by year-end, according to Yahoo Finance. Demand kept building after the quarter closed. One month into the current period, Ciena had already booked nearly as much as it did in all of Q3. Even so, the raised guidance only edged past Wall Street’s estimate, and fourth-quarter margins are set to ease. That was enough to trigger a sell-off after a strong rally. Related: Citi says investors should consider buying tumbling tech stock Rivals also cut their targets, with UBS moving to $394 and B. Riley to $347, Investing.com reported. Other networking names actually rose that day, so this was a Ciena-specific reaction, not a sector selloff. The bull case is simple. Ciena dominates a part of the AI buildout that chipmakers cannot replace, and its backlog gives years of order visibility. The bear case is in the details. Growth now depends on parts supply more than on new orders, and the shares trade at a rich price after their run. Most analysts still rate the stock a Buy. Component supply eases, letting Ciena turn backlog into revenue faster. Cloud and telecom customers keep spending at the current pace. Margins hold up as the product mix shifts. For a two-to-three-year holder, the $10 billion backlog offers real cash-flow visibility. Short-term traders face more volatility. The key risks for Ciena investors include: Customer concentration: Two customers made up 41.7% of revenue last quarter, Ciena disclosed. One lost account could hurt revenue. Valuation: Shares trade above 105 times trailing earnings, which invites sharp swings. Supply limits: Near-term sales are capped by parts availability, not demand. Citi’s $658 target is aggressive, but it rests on a real shift in how AI traffic moves. The near-term risk is valuation and thinner margins, while the long-term appeal is a growing backlog. If you expect AI spending to stay strong, Ciena is a direct way to own the network layer. If you need stability, wait for a calmer entry. Related: Jim Cramer reveals 6 AI stocks to watch in 2026 This story was originally published by TheStreet on Sep 8, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.