en.Wedoany.com Reported - Ciena expects its addressable market to double to $50 billion by 2029. CEO Gary Smith stated during the earnings call that the trends driving growth will not end soon, as hyperscalers have already increased capital expenditures in the first quarter, and this trend is expected to continue. Smith noted that an increasing proportion of these expenditures will be directed toward network infrastructure, as companies seek to monetize their constrained computing investments.
Artificial intelligence is the core driver of this growth. Ciena Chief Strategy Officer David Rothenstein stated that we are currently in an era of AI investment, with demand drivers unprecedented, and generative AI is still in its very early stages. He revealed that in 2026 alone, hyperscalers and neoscalers are expected to invest approximately $1 trillion in capital expenditures.
Rothenstein believes that agentic AI and autonomous networks are on the horizon, ushering in a multi-year investment cycle, and agentic AI could amplify current trends. He noted that millions of agents will communicate and take actions, all requiring connectivity, and the resulting data volume, along with demand for data center and wide area network bandwidth, will have a multiplier effect on existing dynamics.
Existing data center construction faces energy and space constraints, impacting connectivity needs. Smith announced during the call that Ciena has secured its first hyperscaler order for its multi-track solution, RLS Hyper Rail, which provides high-capacity, long-distance connectivity. Rothenstein pointed out that the demand for high-capacity, long-distance connectivity is not limited to hyperscalers; all generated data must move to be monetized and must enter the wide area network.
In the first quarter, Ciena's revenue increased 39.5% year-over-year, from $1.13 billion in the same period last year to $1.57 billion. GAAP EBITDA grew 324% to $283 million, while non-GAAP EBITDA grew 192.9% to $341.8 million. The difference stems from adjustments for items such as share-based payments, tax provisions, asset impairments, and restructuring costs.
Rothenstein noted that neoscalers will also increase spending, as they will not be comfortable entrusting their fate to hyperscalers in the long run and will want to build their own network infrastructure. This group includes enterprises, cloud service providers, and AI companies such as Anthropic or OpenAI. Additionally, service providers are investing, with Smith noting a period of underinvestment in the fixed network sector previously.
Despite strong earnings and positive executive outlook, Ciena's stock fell 12.7% after the earnings release, partly due to high analyst expectations. However, Raymond James analysts noted that the stock has still doubled since the last earnings report.
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