Ciena Corporation (NYSE:
CIEN) is one of the
Top 10 Software and Technology Stocks to Buy Now. Morgan Stanley downgraded the company’s stock to “Underweight” from “Equal Weight” with a price objective of $70, down from the prior target of $73. The downgrade was seen despite the significant opportunities in the broader optical AI market, with Morgan Stanley highlighting disappointing margin performance as a key concern.
A team of telecom engineers discussing a communication infrastructure diagram.
As per the firm’s analyst, Ciena Corporation (NYSE:CIEN)’s shares trade above its 3-year valuation average, which creates a risk/reward skewed more negatively, considering the minimal earnings follow-through on the revenue upside. That being said, the firm expects Ciena Corporation (NYSE:CIEN) to continue posting revenue upside over the upcoming quarters as a result of its artificial intelligence opportunity. However, the firm doesn’t believe that Ciena Corporation (NYSE:CIEN)’s earnings growth accompanying the upside would be meaningful.
The company’s robust fiscal Q2 2025 results exhibit continued global leadership in high-speed connectivity with increased momentum throughout all of the business segments. Amidst accelerating demand aided by cloud and AI, Ciena Corporation (NYSE:CIEN)’s performance continues to validate the durability of a positive network infrastructure spending environment. The company saw revenue of $1.13 billion compared to $910.8 million for Q2 2024.
Scout Investments, Inc., an affiliate of
Carillon Tower Advisers, released the Q1 2025 investor letter.
Here is what the fund said:
Ciena Corporation (NYSE:CIEN) develops and markets networking equipment, software, and services for the telecommunications industry and large cloud service firms. Its offerings include optical network switches and routing platforms. There have been major tariff concerns due to its production concentration in Mexico and Thailand. The stock was also negatively impacted, along with many other AI infrastructure suppliers, following the DeepSeek model release, which caused broad concerns that growth in AI capital spending would slow. The company has improved inventory management and could raise prices to offset tariffs. Also, telecom and cloud spending continues to improve and Ciena is well positioned to benefit from a continuous infrastructure buildout, with growing demand for data center capacity and connectivity.
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.
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Disclosure: None. This article is originally published at
Insider Monkey.
