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Ciena (CIEN) is trading sharply higher after reporting its Q4 (Oct) results this morning, reaching new multi-decade highs. The optical networking systems and software provider comfortably beat expectations on the top and bottom line, with revenue increasing 20.1% yr/yr to $1.35 bln. Additionally, the company issued revenue guidance for Q1 and FY26 well above expectations at $1.35-1.43 bln and $5.7-6.1 bln (about 24% growth at the midpoint), respectively, with the full-year guide raised from its prior +17% growth.

• The strong guide reflects CIEN's view of "robust and durable" demand over the next several years, supported by accelerating cloud demand as orders continue to ramp and cloud providers, by management's account, have underinvested in their networks relative to other areas of AI infrastructure.
• Service provider demand is also steadily improving as carriers reinvest in transport infrastructure, including Managed Optical Fiber Networks (MOFN) tied to AI and cloud traffic, adding another leg to that multi-year growth story.
• This showed up clearly in the Q4 mix, with direct cloud provider revenue up 49% yr/yr and representing 42% of total sales, while non-telco customers accounted for 55% of revenue.
• Optical Networking revenue remained robust, increasing 68.7% yr/yr to $929.2 mln while Routing and Switching revenue increased 8.8% yr/yr to 118.4 mln.
• To meet this growing demand, CIEN is increasing investments and working with supply chain partners to scale capacity, guiding to FY26 capex of $250-275 mln, which is higher than its typical capital intensity.
• It also exited the year with about $5 bln in backlog, including $3.8 bln of hardware and software, supporting a large portion of its FY26 revenue and giving "exceptional" visibility into 2027.

Briefing.com Analyst Insight

CIEN has been on a big run all year, and today's move just adds to it as the AI networking story keeps getting bigger. Management sounded very upbeat on the call, raising its FY26 outlook and leaning into the idea that it is becoming a key optical and interconnect partner for hyperscalers as they build out AI backbones. The growing tilt toward cloud and other non-telco customers, along with record orders and backlog, gives it much better visibility into 2026 and even 2027. That said, the valuation has gotten quite rich, now trading at a one-year forward P/E north of 50x, which sets the bar pretty high. Investors will want to see that this wave of AI-driven orders really does back up management's view of robust and durable demand over the next several years, and that it can turn that into sustained revenue and profit growth, not just a hot AI moment.