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Hyperscalers are centered on monetizing their AI compute investments, which continues to direct a bigger share of spending in the direction of community infrastructure, observes Ciena chief Gary Smith.
In sum – what to know:
Market growth – Ciena stated its addressable market may roughly double to roughly $50 billion by 2029 as AI drives funding throughout WAN and knowledge heart networks.
Spending shift – The corporate expects a rising share of hyperscaler capital expenditure to be directed towards networking infrastructure as operators search to monetize AI compute investments.
Capability investments – Ciena plans to spend $250 million-$275 million in capital expenditures this 12 months whereas increasing manufacturing and provide capability to satisfy demand.
Ciena stated synthetic intelligence-driven demand is increasing alternatives throughout community infrastructure, main the corporate to undertaking that its addressable market may roughly double to roughly $50 billion by 2029.
Talking throughout Ciena’s fiscal second-quarter earnings name, president and chief government officer Gary Smith stated the corporate continues to learn from AI-led demand from each hyperscalers and repair suppliers.
“Since we spoke to you final in March, the biggest hyperscalers have elevated their 2026 capital expenditures with indications of continued growth into 2027 and past,” Smith stated.
Based on Smith, hyperscalers are centered on monetizing giant AI compute investments, a pattern that he expects will direct a bigger share of spending towards networking infrastructure.
“Given the precedence to monetize considerably constrained compute investments, we count on an more and more bigger proportion of that spend shall be directed in the direction of community infrastructure,” Smith stated.
The corporate additionally stated service suppliers are reinvesting in community infrastructure after a number of years of restrained spending, creating new alternatives throughout long-haul, metro, and managed optical fiber networks.
Ciena believes these tendencies are increasing alternatives throughout each its conventional wide-area networking enterprise and newer markets in and across the knowledge heart.
The chief stated demand for high-capacity, low-latency, and high-speed connectivity is being pushed by AI workloads together with mannequin coaching, knowledge ingestion, and inference.
One space benefiting from this pattern is Ciena’s next-generation clever line system, RLS Hyper Rail. Based on Smith, the platform was developed with a number of hyperscalers and is designed to deal with rising capability and effectivity necessities related to knowledge heart interconnect networks and AI inferencing.
Through the earnings name, Smith introduced what he described because the business’s first multirail order from a number one hyperscaler for the platform.
Ciena stated RLS Hyper Rail helps a number of fiber pairs working in parallel over a whole lot of kilometers utilizing superior amplification expertise. Based on the corporate, the platform is designed to ship larger density in addition to improved area and energy effectivity.
Smith additionally stated the corporate is engaged in discussions with extra hyperscalers, neocloud suppliers, and repair suppliers evaluating the platform.
The corporate reported continued momentum for its Information Middle Out-of-Band Administration (DCOM) answer, which mixes routing and switching merchandise with passive optical community expertise. Smith stated DCOM contributed to 88% year-on-year income progress in Ciena’s routing and switching section throughout the quarter.
The chief added that, along with Meta, Ciena has acquired preliminary orders from a second hyperscaler buyer and is progressing by means of lab {qualifications} with a 3rd hyperscaler buyer.
AI demand can be supporting progress throughout Ciena’s interconnect portfolio. Smith disclosed that the corporate just lately secured a brand new win with a significant hyperscaler for its high-performance coherent modules.
Based on the corporate, the modules shall be deployed throughout metro and long-haul knowledge heart interconnect networks supporting each WAN and knowledge heart functions.
Ciena additionally stated it continues to see sturdy demand from hyperscalers for its 400G and 800G pluggable optics merchandise and stays on observe to greater than double pluggable income in contrast with 2025.
To assist anticipated demand, chief monetary officer Mark Graf stated the corporate continues to spend money on manufacturing and supply-chain capability.
“We’re focusing our assets to safe provide and manufacturing capability to ship for each our clients and our house owners,” Graf stated.
The corporate stays on observe to spend between $250 million and $275 million in capital expenditures this 12 months, together with investments in future progress alternatives and provide readiness.
Ciena just lately participated in an RCRTech webinar titled “Scaling Optical Networks for the AI and Hyperscale Period,” which may be seen right here.
