Bank of America Downgrades Ciena (CIEN), Morgan Stanley Lowers PT

Ciena Corporation (NYSE:CIEN) is one of the 12 Best 5G Stocks to Invest in According to Hedge Funds. On January 20, BofA Securities downgraded its rating on Ciena Corporation (NYSE:CIEN) from Buy to Neutral. The firm said it is becoming more cautious about near-term spending on AI-driven networking despite the long-term outlook still staying solid.

BofA Securities noted that valuations across networking stocks are now well above historical levels. Hyperscaler capital spending growth is also expected to slow in 2026. The investment firm expects hypercaler capital expenditure to grow just 39% in 2026, compared with 68% in 2025.

According to BofA Securities, this slowdown could shift investor focus toward order trends, backlog, and deferred revenue. The firm believes that the near-term outlook for the sector has become more difficult. BofA Securities pointed out that while Ciena Corporation’s (NYSE:CIEN) revenue growth could still beat expectations, risks around peak backlog levels, valuation, and high investor expectations are rising.

Previously, on December 17, Morgan Stanley maintained its Equal Weight rating on Ciena Corporation (NYSE:CIEN) and lowered its price target from $195 to $213.

Ciena Corporation (NYSE:CIEN) is an American optical networking systems and software company that specializes in networking systems, components, automation software, and related services.

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.