Ciena vs. Nokia: Which Optical Networking Stock is the Better Buy?

Ciena Corporation CIEN and Nokia NOK are both established players in the telecommunications equipment industry, with a strong focus on optical networking solutions used by service providers worldwide. Each company helps network operators increase bandwidth, enhance efficiency and manage the rapid growth in data traffic fueled by 5G, cloud services and digital transformation. Their overlapping portfolios in fiber-based transport and advanced optical technologies position them as direct competitors as carriers continue investing in faster, more resilient network infrastructure.

According to Fortune Business Insights Report, the global market for optical communication systems and networking was valued at $36.87 billion in 2025. It is expected to go from $38.99 billion in 2026 to $74.21 billion by 2034 at a CAGR of 8.38%. So, for investors looking to make a smart move in the Networking space, which stock truly stands out?

Let’s analyze their fundamentals, growth opportunities, market challenges and valuation to assess which one presents a stronger investment opportunity.

The Case for CIEN

Ciena organizes its operations primarily under the Networking Platforms segment, which accounted for 77.1% of total revenue in fiscal 2025. This segment includes its Converged Optical Networking portfolio along with Routing and Switching solutions, forming the core of Ciena’s networking business. The company’s portfolio, including WaveLogic, Reconfigurable Line System (RLS), Navigator and Interconnect Solutions, remains a recognized industry standard, with WaveLogic 6 and RLS giving it a technology lead and strong positioning to serve global AI network opportunities.

The company is benefiting from strong demand for packet optical transport, switching products, integrated networking solutions and service management software. Its expanding presence in data center connectivity has increased exposure to a broader, end-to-end optical and data equipment market. The company remains a leading supplier of 40G and 100G optical transport technologies, while Fiber Deep represents a meaningful opportunity supported by widespread adoption among major global cable operators. The company expects its total addressable market to expand significantly through 2028, driven by high growth in optical, interconnect and AI-related networking segments.

Ciena is seeing improving market conditions as customers increase network spending to support the rapid expansion of AI-driven applications. Rising network traffic and sustained demand for bandwidth are pushing both cloud providers and service providers to prioritize investments in high-capacity, scalable network infrastructure. This trend underpins long-term opportunities across Ciena’s Systems and Interconnects businesses. To align with these demand drivers, the company is directing R&D toward coherent optical systems, interconnects, coherent routing and advanced solutions such as DCOM, while deliberately reducing emphasis on residential broadband.

Apart from these, Ciena is scaling capacity to support customers’ metro and edge strategies as service providers accelerate investments to modernize and expand connectivity. The 2025 acquisition of Nubis further enhances Ciena’s positioning by adding high-performance, low-power interconnect technologies designed for AI workloads, along with specialized talent. Ciena continues to invest heavily in routing and switching to address edge transformation opportunities tied to 5G networks and cloud environments, while maintaining focus on core growth areas such as subsea, long-haul, metro data center interconnect (DCI) and managed optical fiber networks (MOFN). Driven by strong growth from both cloud and service providers, Ciena's share of the optical market has steadily expanded, reinforcing its overall leadership. The company anticipates continued market gains in 2026.

For fiscal 2026, Ciena’s guidance reflects strong confidence in sustained demand from cloud expansion, DCI and the rapid buildout of AI infrastructure. The company now projects revenue of $5.7–$6.1 billion, implying roughly 24% growth at the midpoint, up from its earlier 17% outlook, while continuing to expect gross margins of around 43% (±1%).

The Case for NOK

Nokia is benefiting from strong demand in its Network Infrastructure business, particularly within the Optical Networks unit. In the recently reported fourth-quarter 2025 results, Nokia posted net sales from Network Infrastructure of €2.4 billion ($2.8 billion), up from €2.03 billion in the year-ago quarter. At constant currency, IP Networks recorded 3% growth year over year, owing to strength in North America, the Middle East and Africa, with healthy demand from AI and cloud customers.

The company’s momentum in high-speed optical technologies bodes well, with 800-gig ZR and ZR+ pluggable products shipping, multiple design wins and scale deployments underway. In the fourth quarter, revenues from Optical Networks improved 17% year over year on a cc basis, driven by rising industry demand, particularly from AI and cloud customers. Sales growth was strong across North America and EMEA, fueled by both AI & Cloud and Communication Service Providers (CSPs). The segment also continued to see robust order intake from these key customer groups, reflecting sustained momentum and market strength.

Also, Nokia is advancing from its expanded optical portfolio following the acquisition of Infinera. The company highlighted that the acquisition strengthened its position in optical networking and supported growth in the segment. Nokia reported ongoing investments in optical manufacturing capacity, including indium phosphide fabrication facilities, to support anticipated demand. These investments are reflected in the company’s planned capital expenditure of €900 million to €1 billion for 2026, with optical manufacturing identified as a key focus area.

Apart from this, the company is gaining from increased spending by AI and cloud customers. In fourth-quarter 2025, AI and cloud customers accounted for 16% of Network Infrastructure net sales and 30% of Optical Networks net sales. For 2025, Nokia generated €2.4 billion in orders from AI and cloud customers. The company stated that optical networking is becoming a more critical component of infrastructure required to support AI workloads and large-scale cloud deployments.

For 2026, Nokia expects a comparable operating profit in the range of €2-€2.5 billion. Free cash flow is estimated at 55-75% of comparable operating profit. The company expects 6-8% sales growth in the Network Infrastructure segment in 2026.

Nokia Corporation Price and Consensus

Nokia Corporation price-consensus-chart | Nokia Corporation Quote

However, Nokia’s net sales from the Cloud and Network Services segment and Nokia Technologies segment declined 11% and 17%, respectively, in the fourth quarter. The decline was due to weakness in Core Networks within the Cloud and Network Services segment, while the Technologies segment fell because of lower catch-up net sales compared with the year-ago quarter.

Moreover, Nokia is exposed to the highly cyclical nature of the telecommunications industry. The company’s international presence exposes it to political and economic disruptions, affecting profitability. Intensifying competition in the wireless equipment market is a headwind.

CIEN Shares vs. NOK

Over the past month, CIEN shares have gained 7.8% while Nokia stock has lost 2.8%.

Valuation for CIEN & NOK

In terms of Price/Book, CIEN shares are trading at 13.1X, higher than NOK’s 1.57X.

How Do Zacks Estimates Compare for CIEN & NOK?

Analysts have significantly revised their earnings estimates upward for CIEN’s bottom line for the current year.

For NOK, there have been downward revisions for the current year.

CIEN or NOK: Which is a Better Pick?

CIEN sports a Zacks Rank #1 (Strong Buy) at present, while NOK has a Zacks Rank #3 (Hold). Consequently, in terms of Zacks Rank and valuation, CIEN seems to be a better pick at the moment.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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