European Investor
03 Sep 2026, 14:37
Ciena Stock Plunges 11.4% Despite Record Q3 Results as High Expectations Overshadow Strong AI Demand
Ciena (NYSE: CIEN) shares fell 11.4% Thursday despite reporting record fiscal third-quarter results, with revenue and earnings surging as artificial intelligence continues to drive investment in high-speed networking infrastructure.
Fiscal Q3 revenue reached $1.67 billion, up 37% from $1.22 billion a year earlier. Adjusted EPS jumped 215% to $2.11 from $0.67, while GAAP diluted EPS increased to $1.83 from $0.35. Ciena also raised its full-year revenue outlook to $6.42 billion, plus or minus $50 million, representing approximately 35% year-over-year growth at the midpoint.
Profitability improved substantially alongside the revenue expansion. GAAP gross margin increased to 45.4% from 41.3%, while operating margin expanded to 18.0% from 6.1%. EBITDA more than tripled to $349.9 million from $109.2 million.
AI-related network investment remains a major growth driver. Optical Networking revenue climbed to $1.19 billion from $815.5 million, while total Networking Platforms revenue reached $1.36 billion, accounting for more than 81% of quarterly sales. Management said AI is generating “compounding waves” of network investment as customers require increasingly high-speed connectivity.
For the fourth quarter, Ciena expects revenue of $1.75 billion, plus or minus $50 million, adjusted gross margin around 45% and adjusted operating margin around 20%.
The sharp stock decline therefore appears less connected to deterioration in Ciena’s underlying business and more to elevated expectations following the stock’s strong exposure to the AI infrastructure theme. Customer concentration may also be attracting attention: just two customers accounted for 41.7% of Q3 revenue. With revenue, earnings and margins all expanding rapidly, Thursday’s 11.4% selloff suggests investors were demanding an even stronger outlook after pricing in substantial AI-driven growth.
Ciena (NYSE: CIEN) shares fell 11.4% Thursday despite reporting record fiscal third-quarter results, with revenue and earnings surging as artificial intelligence continues to drive investment in high-speed networking infrastructure.
Fiscal Q3 revenue reached $1.67 billion, up 37% from $1.22 billion a year earlier. Adjusted EPS jumped 215% to $2.11 from $0.67, while GAAP diluted EPS increased to $1.83 from $0.35. Ciena also raised its full-year revenue outlook to $6.42 billion, plus or minus $50 million, representing approximately 35% year-over-year growth at the midpoint.
Profitability improved substantially alongside the revenue expansion. GAAP gross margin increased to 45.4% from 41.3%, while operating margin expanded to 18.0% from 6.1%. EBITDA more than tripled to $349.9 million from $109.2 million.
AI-related network investment remains a major growth driver. Optical Networking revenue climbed to $1.19 billion from $815.5 million, while total Networking Platforms revenue reached $1.36 billion, accounting for more than 81% of quarterly sales. Management said AI is generating “compounding waves” of network investment as customers require increasingly high-speed connectivity.
For the fourth quarter, Ciena expects revenue of $1.75 billion, plus or minus $50 million, adjusted gross margin around 45% and adjusted operating margin around 20%.
The sharp stock decline therefore appears less connected to deterioration in Ciena’s underlying business and more to elevated expectations following the stock’s strong exposure to the AI infrastructure theme. Customer concentration may also be attracting attention: just two customers accounted for 41.7% of Q3 revenue. With revenue, earnings and margins all expanding rapidly, Thursday’s 11.4% selloff suggests investors were demanding an even stronger outlook after pricing in substantial AI-driven growth.
