AI demand is too hot! Optical communication giant Ciena's performance and guidance both exceed expectations, stock price rises sharply in pre-market trading.

Benefiting from the increasing demand from cloud service providers and the growing market opportunities in the field of artificial intelligence (AI) infrastructure, optical communication equipment manufacturer Ciena (CIEN.US) announced better-than-expected fourth quarter results. The financial report showed that in the quarter ending on November 1st, Ciena's adjusted earnings per share reached $0.91, significantly higher than the market's general expectation of $0.77; revenue increased by 20% year-on-year to $1.35 billion, surpassing analysts' expectation of $1.29 billion. This strong performance was mainly driven by the high growth of its optical networking business - revenue from this business increased from $7.796 billion in the same period last year to $9.292 billion. Ciena President and CEO Gary Smith said, "Record fourth quarter and full-year performance has solidified our position as a global leader in high-speed connectivity, while our role in the AI ecosystem is expanding." Ciena is a telecommunications equipment supplier focusing on optical transmission technology. The company produces fiber optic network equipment for cloud service providers to connect various large data centers. With the surge in the construction of AI-specific data centers (an estimated 43% of new data centers will be dedicated to AI workloads), the demand for data center interconnection (DCI) bandwidth is expected to increase more than sixfold in the next five years, providing Ciena with significant market opportunities. Analysts at Bank of America Corp and Evercore ISI stated before Ciena's financial report was released that strong hyperscale demand, AI driving, and broader network demand are key growth engines for the company. They believe that continued active infrastructure investment will continue to drive revenue growth above expectations and support Ciena's double-digit revenue growth trajectory. Looking ahead, Ciena gave an optimistic performance guidance, expecting revenue for the first quarter of the 2026 fiscal year to be between $1.35 billion and $1.43 billion, well above the market expectation of $1.25 billion; full-year revenue for the 2026 fiscal year is projected to be in the range of $5.7 billion to $6.1 billion, also surpassing analysts' forecast of $5.53 billion. Ciena CFO Marc Graff pointed out, "The performance in this quarter fully reflects the momentum of the company in a strong market environment and our commitment to financial discipline. With continued strengthening operational leverage, robust cash flow generation ability, and a healthy balance sheet, we are well prepared to create greater value for customers and shareholders in 2026." Smith added, "Looking ahead, we are confident in the company's growth trajectory, which is fueled by the steady demand from cloud service and operator customers, as well as the emerging new opportunities both inside and outside data centers." For the full fiscal year 2025, Ciena's revenue reached $4.77 billion, up 19% from $4.01 billion in the 2024 fiscal year; adjusted earnings per share increased from $1.82 in the previous year to $2.64. After the financial report was released, the stock surged over 9% in pre-market trading on Thursday. As of Wednesday's close, driven by strong performance and the surge in demand for AI and cloud computing bandwidth, the company's stock price has risen by 162% year-to-date.