TLDR
- Bank of America raised Cisco’s price target from $114 to $135 and Ciena’s from $550 to $660
- Both stocks hold “Buy” ratings at BofA
- Cisco recorded over $1 billion in Acacia optical orders in Q3, with AI-related optics nearly quadrupling to $950 million
- The 800G optics market is expected to grow nearly tenfold in 2026, with Cisco holding 50%+ market share
- BofA projects the ZR/ZR+ optics market will grow 35% year-over-year in 2026 and 26% in 2027
Bank of America has raised its price targets for Cisco Systems and Ciena, pointing to strong and growing demand for optical networking gear tied to artificial intelligence infrastructure.
Analyst Tal Liani raised Cisco’s price target from $114 to $135 and lifted Ciena’s target from $550 to $660. Both companies kept their “Buy” ratings at the bank.
AI Demand Fuels Optical Orders
Cisco reported more than $1 billion in Acacia optical orders during its third fiscal quarter of 2026. AI-related optics demand within that figure nearly quadrupled, reaching around $950 million.
Hyperscale cloud customers also contributed to growth through spending on non-AI optical infrastructure. This combination pushed Cisco’s optical numbers well ahead of prior expectations.
BofA now expects the global 800G ZR/ZR+ optics market to grow nearly tenfold in 2026. That market is forecast to represent 35.5% of total optical networking in 2026, up from just 4.6% in 2025.
The broader ZR/ZR+ market is projected to grow 35% year-over-year in 2026, then another 26% in 2027. BofA said that pace far outstrips growth in the wider optical networking industry.
Where Cisco and Ciena Stand
Cisco currently holds more than 50% of the 800G market, according to BofA’s research note. The bank credits this lead to Cisco’s earlier experience scaling 400G deployments.
Ciena holds around 30% of the 800G segment. Analysts expect Ciena to gain share because of its 3nm DSP technology, which offers better power efficiency than current alternatives.
Both companies are seen as well-placed for the industry’s shift from 400G to 800G pluggable optics. BofA says even if market share moves between players, the overall market expansion should still drive strong revenue for both.
BofA revised its financial forecasts upward for both firms. For Cisco, the bank raised fiscal 2027 revenue estimates by nearly $700 million, alongside higher earnings expectations.
For Ciena, BofA lifted fiscal 2028 revenue projections by nearly $747 million and raised profit estimates. The bank expects demand from both AI and traditional cloud customers to sustain that growth.
Liani said Cisco’s recent quarterly results and commentary around continued strong Acacia demand keep the bank positive on the optical networking demand environment.
The new price targets are based on revised valuation multiples. Cisco’s target uses 29x 2027 EV/FCF, up from 25x. Ciena’s uses 69x CY27 P/E, up from 62x.
The upgrades come as both companies prepare to compete in what BofA describes as a fast-growing optical cycle tied directly to AI infrastructure buildout.
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