Ciena Corp. (CIEN) makes advanced modems, routers, and other systems for large enterprises in cloud, 5G, data center, and Internet of Things. CIEN broke out in September and has had a humongous run since. But like a few later-stage AI names, it continues to look like it wants to move up from here — if the market allows it, explains Mike Cintolo, editor of Cabot Top Ten Trader.
Ciena specializes in equipment that moves large amounts of data across long distances. That historically has meant its main customers were telecoms. But the emergence of AI has revitalized what had been a market for Ciena’s products hampered by years of weak client spending and pandemic-related supply chain hiccups.
First-quarter revenue blasted past expectations, coming in at $1.43 billion, up 33%. Earnings per share more than doubled to $1.35. Adding to the enthusiasm about the business is the fact telecoms are finally starting to open up their wallets to pay for capital improvements, also partly driven by AI data transfer demands. Telecom sales grew 23% in the first quarter after showing only a 10% uptick for all of fiscal 2025 (ended last October).
Ciena shares etched three pullbacks in Q4 of last year, and had another tough post-earnings shakeout earlier this month. But the 50-day line contained all of them. And CIEN actually pushed to a new high recently before the market yanked it back down.
The relative strength is hard to beat. But if you want in, we’d favor aiming for further wobbles and using a very loose stop in this volatile name (it can move 25 points from high to low per day).
Recommended Action: Buy CIEN.
