Investing.com -- Bank of America analysts have raised their price targets for Cisco Systems and Ciena, citing surging demand for high-speed optical networking equipment driven by artificial intelligence infrastructure expansion.

In a research report, BofA increased its target price for Cisco to $135 from $114 and boosted Ciena’s target to $660 from $550, while maintaining “Buy” ratings on both companies. Analysts said the firms are emerging as key beneficiaries of the rapid migration from 400G to 800G optical networking technology.

BofA highlighted Cisco’s strong quarterly momentum, noting that the company recorded more than $1 billion in Acacia optical orders during the third quarter, with AI-related optics demand nearly quadrupling to approximately $950 million. Additional growth was attributed to hyperscale cloud customers investing in non-AI optical infrastructure.

BofA expects the global 800G ZR/ZR+ optics market to expand nearly tenfold in 2026 as hyperscalers upgrade their data center and networking infrastructure. The bank forecasts 800G technology will account for 35.5% of the overall optical market in 2026, up sharply from just 4.6% in 2025.

Cisco currently leads the 800G segment with an estimated market share above 50%, according to the research note, while Ciena holds roughly 30%. Analysts said Cisco’s advantage stems from its earlier success scaling 400G deployments, though Ciena is expected to gain additional share because of its more power-efficient 3nm DSP technology.

The report also noted that the broader ZR/ZR+ optics market is projected to grow 35% year-over-year in 2026 and another 26% in 2027, significantly outpacing the overall optical networking industry. Analysts argued that even if market share shifts between competitors, the rapid expansion of the market should still generate substantial revenue growth for both companies.

BofA revised upward its financial forecasts for both firms. For Cisco, analysts increased fiscal 2027 revenue estimates by nearly $700 million and raised earnings expectations as AI infrastructure spending strengthens demand for networking systems and optical products.

For Ciena, the bank lifted fiscal 2028 revenue projections by nearly $747 million and sharply increased profit estimates, reflecting expectations for sustained demand from both AI and traditional cloud infrastructure customers.