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3 AI Optical Networking Stocks Positioned for the Data Center Buildout

Author: Nathan Reiff. First Published: 9/8/2026.

AI-driven networking companies have been waiting for a sign that could either extend the recent pullback or reinvigorate a bull run, but Ciena Corp.'s (NYSE: CIEN) Q3 earnings report may have raised more questions than it answered. Despite strong earnings and revenue, along with continued robust demand for AI and optical networking, shares fell after the report. The decline may have been driven by expectations that margins could moderate after the company benefited from tariff refunds, as well as a broader reckoning with the industry's sky-high investor expectations.

Still, Ciena's report offers a fresh read-through on AI-based networking demand that may be helpful for investors seeking diversified exposure. While Ciena provides optical networking systems and platforms, rivals Lumentum Holdings Inc. (NASDAQ: LITE) and Coherent Inc. (NYSE: COHR) offer optical components and transceivers. While it is not the strongest buy signal, Ciena's report does suggest that the recent sell-off may have improved the risk-reward calculation for these companies.

A Closer Look at Ciena's Earnings

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Ciena's top and bottom lines were strong on paper, with adjusted earnings per share (EPS) of $2.11 on nearly $1.7 billion in revenue. Both figures comfortably exceeded analysts' estimates. Adjusted operating margin climbed to 22.5%, a record for the company. EPS growth was particularly notable, increasing 215% from the same period one year ago.

Demand continues to significantly outpace supply, resulting in a backlog of $8.5 billion for Ciena, an increase of $800 million from last year. The company expects this trend to continue and projects a backlog of more than $10 billion by the end of the fiscal year. This helped drive a forecast for 30% year-over-year (YOY) revenue growth in fiscal 2027.

What May Be Behind Ciena's Plunge

After all that good news, Ciena shares still fell in the hours immediately following the earnings release and remained down more than 15% over the five days surrounding the report. Digging deeper, in-line guidance for fiscal Q4 may not have met analysts' lofty expectations for the company's growth trajectory. Further, just two major customers accounted for 42% of the firm's quarterly revenue, leaving it highly vulnerable if one or both clients shift their business elsewhere or otherwise reduce their orders.

Notably, Ciena's most recent share-price drop is somewhat unique compared with the broader industry. One of the company's primary competitors, Arista Networks (NYSE: ANET), is down just 1.8% over the last five days. Looking at the past month, CIEN shares have plunged 22%, while ANET is actually up nearly 1%. This may suggest that Ciena's recent performance has resulted from company-specific factors rather than industry-wide weakness.

Lumentum and Coherent: A Different Perspective on the Industry With Unique Benefits

Both Lumentum and Coherent are between earnings reports as of early September, leaving investors waiting for the latest updates on their financial performance. However, these firms offer a different perspective on the industry because of their unique positions in the value chain. Both companies market photonic tools for AI-cluster connectivity applications. Demand across the space has been stellar, but questions remain about whether this frenzied pace can continue.

Hyperscaler spending on photonics is robust, with some estimates placing AI hyperscaler capital expenditures at $500 billion or more this year alone. Because Lumentum and Coherent provide vital hardware for these applications, they have strong potential as pick-and-shovel plays that can benefit from industry-wide demand. Virtually all companies in the space will need their products.

The shift toward 800G and 1.6T optical interconnects in the coming years may be a major driver of continued demand for both companies. These technologies allow companies to significantly expand bandwidth to support larger clusters and connectivity tools. At this point, 800G is the primary volume product, but investors with a longer time horizon will expect 1.6T to affect hyperscalers in the years ahead.

Across this widespread technological upgrade, Lumentum may be the stock to watch. It is the most pure-play photonics firm on this list and may therefore be best positioned to benefit from upgrades at scale. On the other hand, Coherent has broader exposure that also includes lasers used in industrial and semiconductor manufacturing, compound semiconductor materials and more.

All three companies enjoy bullish forecasts from analysts across Wall Street, but investors will want to distinguish among them based on their different roles in the ongoing data center buildout. Ciena's latest earnings report may signal some turbulence, but the company has plenty of strengths. Lumentum and Coherent, on the other hand, may be poised to skyrocket as their products become even more vital.