Shares of Ciena (NYSE: CIEN) rose 109.8% in the first half of 2026, according to data from S&P Global Market Intelligence. The networking equipment veteran more than doubled due to accelerating demand for optical networking infrastructure tied to artificial intelligence workloads.
The rally peaked in late May before a 21.8% pullback in June. For context, the S&P 500 (SNPINDEX: ^GSPC) gained 12.3% over the same period, and the Nasdaq-100 rose 15.7%.
The stock also outperformed other networking heavyweights. For instance, Cisco Systems (NASDAQ: CSCO) gained 52.5% in the first half while Extreme Networks (NASDAQ: EXTR) stopped just short of doubling with a 94.4% rise.
The network finally gets its moment
For years, the AI infrastructure conversation revolved almost exclusively around semiconductors. But as hyperscalers built out massive clusters of GPUs and started training ever-larger models, a new bottleneck emerged: the network itself. Moving enormous amounts of data over long distances without introducing latency requires high-speed networking equipment capable of handling the load.
Ciena’s optical networking systems transport massive volumes of data across long distances with minimal latency, positioning the company at the center of the AI infrastructure build-out. In February, Ciena released the Vesta 200 series of pluggable optical modules, delivering massive data speeds with minimal power consumption.
In its fiscal second quarter ended May 2, 2026, the company reported revenue of $1.57 billion, up 40% year over year. The backlog hit $7.7 billion, with management noting that about 80% of the hardware backlog would convert to revenue in the next 12 months. Direct cloud customer revenue jumped 70% year over year.
The results also beat Wall Street’s consensus estimates, and the management’s full-year guidance was boosted across the board.
One might think investors would have loved the soaring sales and sizzling profits in this early June report. But Ciena’s stock fell 9% the next day as lots of investors slammed the “sell” button to lock in their gains.
Priced for perfection
Ciena is growing by leaps and bounds, but the stock returns include a heaping dose of future growth expectations. And I mean, it’s a lot.
As of July 10, Ciena’s stock has more than quintupled over the last year. In the same period, Cisco and Extreme are lagging with returns of 73% and 82%, respectively.
As a result, Ciena’s shares are trading at 153 times trailing earnings and 78 times free cash flow. The business is healthy, but Ciena’s investors are looking for superhero-level vital signs.
This stock traded just above $1,000 per share at the peak of the dot-com bubble. Ciena is almost back there again, though it passed the old market cap record of $42.5 billion in February this year.
And I’m afraid it’s too much, too fast. Ciena’s skyrocketing multiples are exposing investors to a massive valuation risk.
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ciena and Cisco Systems. The Motley Fool has a disclosure policy.
