Ciena Corp shares plunge nearly 15% despite stronger-than-expected earnings

Shares of Ciena Corp plunged nearly 15% on Thursday, despite the networking equipment provider reporting stronger-than-expected quarterly earnings and raising its revenue outlook. The sharp decline suggested investors had been anticipating an even bigger boost from the ongoing artificial intelligence spending boom.

At 1:18 p.m. EDT, Ciena shares were trading at $527.94, down 14.97%, or $93.91, from Wednesday’s closing price of $620.37. The stock had recently been trading near its 52-week high of $637.51 before the earnings announcement.

The selloff highlighted the elevated expectations surrounding AI-linked companies, where solid financial performance may no longer be sufficient to satisfy investors seeking outsized growth projections.

For its fiscal second quarter, Ciena reported revenue of $1.57 billion, marking a 40% increase from the same period a year earlier. Adjusted earnings per share came in at $1.64. The company projected fiscal third-quarter revenue of approximately $1.625 billion, with a variance of $50 million on either side. It also raised its fiscal 2026 revenue forecast to $6.3 billion, plus or minus $100 million.

The results comfortably exceeded Wall Street expectations.

According to Barron’s, analysts had expected adjusted earnings of $1.46 per share and revenue of $1.51 billion. However, the stock had already fallen 5.7% in premarket trading, indicating that investors were looking for even more aggressive guidance.

Ciena CEO Gary Smith said the results reflected “disciplined execution in a dynamic supply environment” and connected the company’s plan to “structural, multi-year opportunities created by AI-driven demand.” CFO Marc Graff pointed to “significant year-over-year revenue growth” for the quarter and “nearly fourfold growth in adjusted earnings per share.”

Ciena supplies optical networking equipment and software that help telecom operators, cloud providers and data-center companies manage growing data traffic. As technology giants increase spending on AI infrastructure, demand for high-speed connections between chips, servers and data centers has positioned Ciena as a key beneficiary of the AI expansion.

The broader market weakness also weighed on sentiment.

The Nasdaq 100 declined on Thursday after a revenue shortfall from Broadcom pressured semiconductor stocks and dampened enthusiasm for AI-related shares.

At 11:29 a.m. ET, the Dow Jones Industrial Average rose 862.27 points, or 1.70%, to 51,549.34, the S&P 500 gained 19.32 points, or 0.26%, to 7,573.00 and the Nasdaq Composite lost 51.21 points, or 0.19%, to 26,802.76.

Although Ciena’s guidance topped some analyst estimates, it failed to prevent the stock’s steep decline. MarketScreener reported that the company expects fiscal 2026 revenue between $6.2 billion and $6.4 billion, compared with a FactSet consensus estimate of $6.18 billion. Second-quarter revenue of $1.57 billion also exceeded the FactSet forecast of $1.50 billion.

The company noted that AI-related demand patterns remain uneven. Two customers accounted for 34% of total revenue during the quarter, meaning any delays in orders or spending reductions could significantly affect results. Ciena also highlighted risks related to customer purchasing cycles, tariffs, competitive pressures, supply-chain challenges and uncertainty surrounding the pace of AI-network infrastructure investments.