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Ciena said it has secured supply to support at least 30% revenue growth going into 2027 and believes it has secured enough supply to extend that 30% growth trend through 2029
In sum – what to know
Optical demand accelerates – Ciena says orders have doubled since 2024 and are expected to rise at least another 50% in 2026, as AI drives demand for optical systems and interconnects.
DC expand opportunity – Ciena expects optical connectivity inside data centers to accelerate, with CPO/NPO, coherent plugs and other interconnect products opening new markets.
Supply remains constrained – Ciena has secured supply to support at least 30% revenue growth in 2027 and believes that growth trend can extend through 2029.
Ciena is forecasting continued growth in demand for optical systems and interconnects as customers increase network investment around AI, while industry supply remains constrained. The company expects orders to rise at least 50% in fiscal 2027 and plans to exit the year with a minimum $10 billion backlog.
“We continue to believe that we’ll exit the fiscal year with at least a 50% growth in orders to yield a minimum $10 billion in backlog, which covers our 2027 revenue outlook and starts to build the 2028 revenue base,” Marc Graff, Ciena’s senior vice president and chief financial officer, said in a recent call with investors.
Ciena said it has secured supply to support at least 30% revenue growth going into 2027 and believes it has secured enough supply to extend that 30% growth trend through 2029, supporting a revenue target of approximately $14 billion.
The supply position reflects what Ciena describes as a continuing imbalance between demand and industry capacity. Graff said orders, which the company uses as a proxy for unconstrained demand, doubled from 2024 to 2025 and increased at least another 50% into 2026. Revenue, which he described as a proxy for supply in a constrained environment, increased by 27% on average over the same two-year period.
“As a result, over the same period, backlog has more than doubled from ’24 to ’25 and again from ’25 to ’26 to an expected $10 billion exiting 2026. Clearly, there is not a demand issue. What is clear is the need for the industry to accelerate its capacity requirements for a number of years to catch up to demand,” Graff said.
Ciena does not expect a balanced supply-demand environment before 2028. For 2027, it therefore expects demand to continue outstripping supply, while its supply-chain team works to secure additional capacity.
The company links the demand acceleration directly to optical networking requirements associated with AI. Graff said customers are recognizing that the network is key for the monetization of AI investments, driving demand for optical systems and interconnects.
Data centers represent a new market for Ciena’s interconnect portfolio. The company is taking a relatively modest approach to its 2029 revenue assumptions for newer products such as CPO/NPO and Coherent-Lite, while identifying potential as optical connectivity expands inside data centers.
“The move to optical within the data center is accelerating and Ciena leads the industry in optical connectivity expertise,” Graff said. “So these products could provide significant upside to our baseline assumptions as the markets and applications develop for them.”
Ciena estimates an $11 billion 2029 total addressable market for the newer markets represented by CPO/NPO and Coherent-Lite.
Ciena expects its optical systems segment to address a $21 billion total addressable market (TAM) in 2029, growing at roughly an 18% CAGR. Its Interconnect portfolio is expected to reach a $17 billion TAM, with an average annual growth rate of 95%.
The company is also planning significant investment in optical technology and products for the data center segment. Graff said Ciena expects to invest between $2.5 billion and $3 billion in R&D over the next three years, including next-generation WaveLogic technologies, new material systems, and products that compete inside the data center.
The company’s data-center opportunity is also reflected in its new reporting structure, which takes effect with fiscal 2027. Ciena will report optical systems, Interconnects, global services, and routing and other, with the first two segments reflecting the company’s optical and data-center-related opportunities.
The strategy ultimately centers on expanding optical systems and interconnects as AI increases bandwidth requirements and optical connectivity moves further into the data center.
“The foundation of our pure-play optical systems and interconnects business model will drive significant earnings expansion as the world moves from copper and electrons to fiber and photons,” Graff said.
Ciena recently said it expected its total addressable market to effectively double over the next three years, growing from approximately $25 billion today to approximately $50 billion by 2029.
