Ciena Corporation

New York Stock Exchange
Back to all articles
Bullish +75

This Is My Best Artificial Intelligence (AI) Stock to Buy in June (Hint: It's Not Micron Technology)

AI-generated analysis

📊 Ciena (CIEN) is highlighted as a top AI stock to buy in June, serving as a critical networking alternative to Micron's memory chips.

🔗 Like Micron, Ciena provides essential infrastructure components for AI data centers by enabling high-speed data transfer between clusters.

🚀 Ciena's revenue grew 33% year-over-year in fiscal Q1 2026, reaching $1.43 billion, with full-year guidance pointing to 28% growth.

💰 Adjusted earnings surged 111% year-over-year in the first quarter, driven by strong pricing power and demand outpacing supply.

📦 The company received $2 billion in orders in fiscal Q1, resulting in a substantial order backlog of $7 billion at quarter-end.

📈 Demand for optical networking components is expected to grow at a 21% compound annual rate through the next five years.

💹 Ciena trades at a high trailing earnings multiple of 372x, but analysts project a forward earnings multiple of 128x based on anticipated growth.

📉 The stock has already risen 136% in 2026, yet investors are encouraged to consider buying ahead of its June 4 fiscal Q2 earnings report.

🏗️ Massive investments in AI data centers are expected to continue through the end of the decade, with McKinsey forecasting $5.2 trillion in annual capital spending by 2030.

⚠️ The Motley Fool's Stock Advisor team did not include Ciena in their current top 10 list of best stocks for investors to buy now.

📅 Micron Technology is mentioned as a comparison point, with its fiscal Q3 results scheduled for release on June 24.

🔮 Market research suggests that supply constraints in the optical networking market will likely accelerate Ciena's bottom-line growth in the coming quarters.

Bullish Signals
  • Ciena's revenue increased by 33% year over year in the first quarter of fiscal 2026 to $1.43 billion.
  • The company anticipates full-year revenue to increase by 28% to $6.1 billion at the midpoint of its guidance range, an improvement over the 19% growth it clocked in the previous fiscal year.
  • Ciena's adjusted earnings increased by 111% year over year in fiscal Q1, driven by AI data center-fueled demand and higher profitability.
  • Strong pricing power in the optical transport industry is expected to drive further margin gains in the second half of the fiscal year.
  • Demand for Ciena's products is outpacing supply, leading to a jump in prices with expectations of further price increments for several quarters.
  • Ciena received $2 billion in orders in fiscal Q1, exceeding its revenue, and ended the quarter with an order backlog of $7 billion.
  • Analysts expect Ciena's bottom-line growth to accelerate due to supply constraints in the optical networking market in the coming quarters.
  • Massive investments in AI data centers are poised to continue through the end of the decade, with McKinsey expecting a whopping $5.2 trillion in annual capital spending in 2030.
  • Ciena is expected to sustain its healthy earnings growth rate beyond the next three fiscal years due to robust top- and bottom-line growth over the long run.
Risk Factors
  • Ciena is trading at a trailing earnings multiple of 372 times, which is described as 'expensive' and raises valuation concerns despite expectations of future growth.
  • The company's forward earnings multiple is also noted to be on the expensive side, suggesting high current pricing relative to expected performance.
Full Analysis
Ciena (CIEN) is highlighted as a top artificial intelligence stock to consider buying ahead of its fiscal second-quarter earnings report scheduled for June 4, driven by strong growth in revenue and profitability linked to AI data center infrastructure. The company's optical networking components are essential for enabling high-speed data transfer between AI data centers and servers, addressing bottlenecks caused by the massive size of AI models that require linking multiple clusters together. According to market research cited in the article, the global data center interconnect market is projected to grow from under $19 billion this year to nearly $65 billion by 2035, with demand for optical networking components expected to increase at a compound annual growth rate of 21% over the next five years. Ciena reported significant financial performance in its first quarter of fiscal 2026, which ended on January 31, 2026, with revenue increasing by 33% year over year to $1.43 billion and adjusted earnings surging by 111%. The company anticipates full-year revenue growth of 28% to reach $6.1 billion at the midpoint of its guidance range, an improvement from the 19% growth recorded in the previous fiscal year. This profitability boost is attributed to higher pricing power in the optical transport industry, as demand for Ciena's products currently outpaces supply, leading to price increments expected to continue for several quarters. The company received $2 billion in orders during the first quarter of fiscal 2026, exceeding its revenue for that period, and ended the quarter with an order backlog of $7 billion. While Ciena is trading at a high trailing earnings multiple of 372 times, analysts expect its forward earnings multiple to reflect significant bottom-line growth, with Yahoo! Finance projecting a potential 136% increase in earnings for the current fiscal year. Long-term growth prospects are supported by massive investments in AI data centers expected to continue through the end of the decade, with McKinsey estimating $5.2 trillion in annual capital spending in the sector by 2030.