Needham analyst reveals: NVIDIA Corporation (NVDA.US) plans to build its own large-scale long-distance transmission network. These companies may become big winners.

Needham Securities released a research report stating that NVIDIA Corporation (NVDA.US) is reportedly advancing a "massive-scale" telecommunications project aimed at creating a new ultra-high capacity long-distance transmission network. The investment firm believes that the total investment in the project over the next three years could range from $5 billion to $10 billion, and companies such as Ciena (CIEN.US), Cisco Systems, Inc. (CSCO.US), among others, are expected to benefit from it. Needham analyst Ryan Koontz wrote in a report to clients, "Although we cannot be certain of NVIDIA Corporation's strategic intent, we speculate that the company is attempting to reduce its reliance on the four major hyperscale cloud providers - which currently dominate the global hosting and long-haul interconnection capacity market. NVIDIA Corporation may provide support to its strategic emerging cloud partners and future enterprise customers through self-built direct-connect networks and hosting services." Koontz also noted that in the undisclosed project, contracts are expected to be awarded to Ciena, Cisco Systems, Inc., Nokia Oyj Sponsored ADR, Corning Inc, Zayo, and Lumen. Koontz further analyzed that Ciena could potentially generate an additional $500 million to $800 million in sales revenue over the next two to three years from this project, while the incremental gains for Cisco Systems, Inc. and Nokia Oyj Sponsored ADR are relatively lower. Given the recent pullback in Ciena's stock price, Koontz expressed a more optimistic outlook on the stock, stating that the company's revenue growth path is clear as the industry's supply chain continues to expand. He gave Ciena a "buy" rating with a target price of $600. In addition to Ciena, research data also shows that the network system includes "numerous" optical fiber links to support data transmission capacity of over 5PB. Companies like Corning Inc, Ciena, Nokia Oyj Sponsored ADR, Zayo, and Lumen are all expected to benefit from this. Corning Inc is expected to be a major fiber supplier in all U.S. deployment projects, while Zayo and Lumen will participate in the construction through a Managed Optical Fiber Network model. NVIDIA Corporation has not responded immediately to requests for comment regarding the above news.