Bank of America analysts have lifted their price targets for two major optical networking suppliers, citing a sharp pickup in demand for high-speed optical products tied to expansion of artificial intelligence infrastructure.
In a research note, the bank raised its target for Cisco to $135 from $114 and increased its target for Ciena to $660 from $550, while retaining Buy ratings on both companies. The firm said both vendors are poised to benefit from an industry-wide movement from 400G to 800G optical networking equipment.
Quarterly and order details
BofA highlighted Cisco’s recent quarterly momentum, reporting that the company logged more than $1 billion in orders for Acacia optical products during its third quarter. The analysts said AI-related optics demand for Cisco nearly quadrupled to about $950 million, and that additional strength came from hyperscale cloud customers purchasing non-AI optical infrastructure.
Market outlook for 800G
The bank projects a pronounced acceleration in the 800G ZR/ZR+ optics market as hyperscale operators upgrade data center and networking architectures. BofA expects the global 800G ZR/ZR+ market to expand nearly tenfold in 2026 as these upgrades occur, and it forecasts that 800G technology will represent 35.5% of the overall optical market in 2026, rising sharply from 4.6% in 2025.
Beyond 2026, BofA projects the broader ZR/ZR+ optics market will grow about 35% year-over-year in 2026 and then by another 26% in 2027, outpacing growth in the wider optical networking industry.
Competitive positions
According to the research note, Cisco currently leads the 800G segment with an estimated market share above 50%, while Ciena holds roughly 30%. The analysts attributed Cisco’s lead in part to its earlier success scaling 400G deployments. They also said Ciena could gain additional share because of its more power-efficient 3nm DSP technology.
The note emphasized that even if market-share movements occur between competitors, the rapid market expansion should still translate into significant revenue growth for both companies.
Revised financial forecasts
BofA updated its financial estimates to reflect the stronger outlook. For Cisco, the bank raised fiscal 2027 revenue expectations by nearly $700 million and increased earnings projections as AI infrastructure spending bolsters demand for networking systems and optical products.
For Ciena, BofA bumped fiscal 2028 revenue forecasts by nearly $747 million and sharply increased profit estimates, citing sustained demand from AI and traditional cloud infrastructure customers.
Bottom line
BofA’s research elevates near-term targets and outlooks for Cisco and Ciena on the back of an accelerating shift to 800G optics driven by hyperscaler upgrades and strong AI-related orders. The bank’s analysis suggests both companies stand to capture material revenue growth as the ZR/ZR+ optics market expands.