Key Highlights
- BofA increased Cisco’s target price to $135 from $114 and Ciena’s to $660 from $550
- Both companies maintain “Buy” recommendations from the investment bank
- Acacia optical orders at Cisco exceeded $1 billion in Q3, with AI-focused optics jumping to $950 million—nearly a fourfold increase
- The 800G optics segment is forecast to expand almost tenfold during 2026, with Cisco commanding over half the market
- BofA anticipates the ZR/ZR+ optics sector will expand 35% in 2026 and another 26% in 2027
Bank of America Securities has upgraded price objectives for both Cisco Systems and Ciena Corporation, highlighting robust and accelerating demand for optical networking equipment driven by artificial intelligence data center buildouts.
Tal Liani, the bank’s lead analyst covering the sector, elevated Cisco’s target from $114 to $135 while boosting Ciena’s objective from $550 to $660. The firm maintains “Buy” recommendations on both networking equipment providers.
Artificial Intelligence Powers Optical Equipment Surge
During its third fiscal quarter of 2026, Cisco disclosed that Acacia optical orders surpassed the $1 billion threshold. Within that total, demand specifically linked to artificial intelligence applications climbed nearly four times over, hitting approximately $950 million.
Hyperscale cloud providers simultaneously expanded their investments in traditional optical infrastructure beyond AI applications. This dual demand stream propelled Cisco’s optical segment performance significantly beyond market forecasts.
Bank of America now projects the worldwide 800G ZR/ZR+ optics segment will experience nearly tenfold expansion throughout 2026. Analysts estimate this market will constitute 35.5% of overall optical networking revenue in 2026, a dramatic jump from merely 4.6% in 2025.
The total ZR/ZR+ market is anticipated to surge 35% year-over-year in 2026, followed by an additional 26% growth in 2027. According to BofA, this expansion rate substantially exceeds the broader optical networking industry’s overall trajectory.
Market Position Analysis for Both Companies
Cisco currently commands more than half of the 800G market segment, based on BofA’s industry analysis. The bank attributes this dominant position to Cisco’s prior expertise in scaling 400G technology deployments across customer networks.
Ciena controls approximately 30% of the 800G market. Bank of America analysts project Ciena will capture additional market share due to its advanced 3nm DSP chip technology, which delivers superior power efficiency compared to competing solutions.
Both networking vendors are strategically positioned to capitalize on the industry transition from 400G to 800G pluggable optics platforms. BofA notes that regardless of competitive share shifts between vendors, the massive overall market growth should generate substantial revenue gains for both companies.
The investment bank has revised its financial projections upward for both organizations. For Cisco, BofA increased fiscal 2027 revenue estimates by approximately $700 million while also raising earnings forecasts.
For Ciena, Bank of America lifted fiscal 2028 revenue projections by nearly $747 million and increased profit expectations. The firm anticipates sustained demand from both AI infrastructure and conventional cloud customers will support this growth trajectory.
Liani emphasized that Cisco’s latest quarterly performance and management guidance regarding persistent strong Acacia demand reinforce the bank’s optimistic outlook on the optical networking demand landscape.
The updated price targets reflect revised valuation frameworks. Cisco’s new objective applies a 29x 2027 EV/FCF multiple, increased from 25x. Ciena’s target employs a 69x CY27 P/E ratio, up from the previous 62x.
These upgrades arrive as both companies position themselves to compete in what BofA characterizes as a rapidly accelerating optical equipment cycle directly linked to artificial intelligence infrastructure expansion.
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