JPMorgan upgrades Ciena as it sees limited impact from AI concerns

Investing.com -- JPMorgan upgraded Ciena Corp (NYSE: CIEN) to “Overweight” and raised its price target to by $4 to $88, as it sees an attractive entry point after recent share price weakness. The brokerage shrugged off concerns over DeepSeek’s AI model efficiency impacting broader capital expenditure trends, noting minimal near- to medium-term risks to Ciena’s fundamentals.

“We are picking through the exaggerated share price reactions relative to AI levered suppliers, led by investor concerns driven by the revelations around the capital efficiency of DeepSeek’s AI models and see an interesting entry point into shares of CIEN,” analyst said. JP Morgan analyst highlighted robust cloud spending, recovering telecom capex, and increased investments in data center interconnectivity from MOFN providers as key growth drivers.

Ciena shares, trading at 19x estimated 2026 earnings, present value relative to improving momentum in telecom and cloud capex, JPMorgan said. The brokerage expects earnings growth to reach the high end of its 8%-11% forecast for FY25 and FY26, underpinned by stronger data center connectivity investments and cyclical telecom recovery.

JPMorgan maintains Ciena as its third-ranked pick among optical companies, behind Coherent (NYSE: COHR) and Lumentum.

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