- Ciena reported order backlog of about $7B at the end of its fiscal first quarter 2026 as supply constraints continue
- Service providers that have “under-invested” in optical networking are now ramping up spending, Ciena CEO Gary Smith told Fierce
- Ciena is optimistic about growth opportunities tied to co‑packaged optics and hyperscaler AI training workloads
Supply chain issues persist for Ciena as the company’s order backlog ramped from $5 billion to approximately $7 billion at the end of first quarter 2026.
Ciena CFO Marc Graff minced no words about the “challenging” supply landscape on Thursday’s earnings call. “To be blunt, our revenue in the first quarter would have been higher [if not] for these constraints,” he said.
In a conversation following the call, Ciena CEO Gary Smith told Fierce the supply challenges stem from multiple factors happening simultaneously, such as the “explosion” in hyperscaler AI training and the shift from electrical to optical components inside the data center.
“We’ve been able to get out ahead of this with the close relationships we have with the hyperscalers. So we’ve built more capacity and you’ve seen that in our results,” said Smith, while acknowledging the company is “still not able to satisfy all the demand.”
Ciena first brought up a shortage of optical and photonic components in December, when it indicated plans to boost capex to meet cloud provider needs.
Despite noting Ciena is “deeply engaged” with component vendors to expand supply through long-term purchase agreements, Graff foresees demand “will continue to outstrip supply for the next several quarters.”
New tariffs likely ‘immaterial’
Regarding the latest tariff turmoil, where President Donald Trump announced a new 15% global tariff after the U.S. Supreme Court struck down the administration’s reciprocal tariffs, Graff said he doesn’t think the situation will have a sizable impact on Ciena, for now.
“Based on current information, we believe that these developments will have an immaterial effect on our business,” he said. “Obviously, we are monitoring new developments and working closely with customers and suppliers to assess any future impacts.”
Service providers step up on optical growth
Q1 2026 saw Ciena increase its optical networking revenue by 40% year-over-year to $1.02 billion, which Smith noted was driven not only by hyperscalers but also service providers that have previously “largely under-invested” in their optical fiber networks.
“They’ve been focused on 5G and mobile, which have not yielded the financial performance they would have anticipated,” Smith told Fierce. “Now they’re focused on building out this optical infrastructure, you know, reinvesting in that.”
Service providers are particularly looking at Ciena’s Managed Optical Fiber Networks (MOFN) technology to help hyperscalers deploy dedicated private networks, with Smith noting MOFN makes up 10-15% of the company’s service provider business.
Ciena bets big on AI training, co-packaged optics
Touching upon Ciena’s new co-packaged optics engine – Vesta 200 6.4T CPX – Smith said the technology signals one of the first phases of data center “opticalization.”
“We’re getting to the end of the technology piece around electrical,” he said. “They’re not able to scale because of the GPU increase in capacity and speed.”
Smith argued co-packaged optics “is now mature” in that it can “achieve the power thresholds necessary within the data center.” In Ciena’s case, it touts up to 70% in reduced power consumption from its new product.
As for the hyperscaler ramp in AI training models, that’s a “completely new” market for Ciena, but it’s already seeing orders roll in to support those efforts, he said.
“We’ve already got orders for hundreds of millions of dollars for that…that’s in its sort of first innings, really,” Smith concluded.
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