Ciena Stock Skyrockets Over 23% on Strong Earnings Beat
The networking equipment maker's shares surged after it reported Q3 earnings that significantly surpassed analyst expectations, driven by high demand from cloud and AI sectors.
Shares of Ciena (CIEN) soared more than 23% in pre-market trading Thursday after the networking systems and software company posted third-quarter earnings that significantly outpaced Wall Street estimates. The surge was fueled by robust demand for its high-speed optical and networking equipment, particularly from cloud providers and companies building out infrastructure for artificial intelligence.
For its fiscal third-quarter, Ciena reported , comfortably beating the consensus forecast of $0.53 per share and $1.17 billion in revenue. The results represent a 91% year-over-year increase in adjusted earnings, underscoring a significant acceleration in the company's growth trajectory.
The market's reaction was swift and decisive, with the stock jumping to approximately $115.85 in early trading. This positive momentum comes as the company capitalizes on the voracious appetite for high-speed connectivity required by modern data centers and AI applications. Revenue from cloud providers alone jumped 94% year-over-year, accounting for 40% of Ciena's total revenue for the quarter.
Building on the strong results, Ciena issued an optimistic forecast for the fourth quarter, projecting revenue between $1.24 billion and $1.32 billion, which is ahead of prior consensus estimates. The company also announced it is accelerating its goal to reach a 15-16% operating margin by 2026, a year ahead of schedule, signaling confidence in sustained demand. , with JPMorgan raising its price target on the stock to $140 from $105, citing Ciena's leadership in the optical systems market.
However, the strong financial report was accompanied by news of a workforce reduction of up to 5%. Ciena framed the decision as a strategic pivot, reallocating resources from residential broadband research and development toward its more profitable AI and cloud-focused initiatives. While presented as a move to enhance efficiency, the timing of layoffs amidst record results drew some criticism. The company noted that it would incur restructuring charges in the fourth quarter related to the headcount reduction.