Ciena's Optical Boom Validates Nokia's AI Pivot as Shares Step Back From Peaks

Ciena’s Q2 revenue jumps 40% on AI optical gear demand, reinforcing Nokia’s strategy as its stock retreats from highs after a multi-day rally.

Nokia’s dramatic stock rally has cooled this week, but a resounding earnings report from rival Ciena provided fresh external validation for the Finnish company’s bet on optical networking infrastructure. Ciena’s fiscal second-quarter results, released on 4 June, drove home that demand for AI-driven optical gear is a sector-wide phenomenon, not a single-company narrative.

Ciena posted revenue of $1.57 billion for its second quarter, a 40 percent jump year-on-year, with adjusted earnings per share surging from $0.42 to $1.64. Optical networking accounted for 70 percent of that revenue, making the report a direct market indicator for the segment Nokia has pushed to the forefront following its $2.3 billion acquisition of Infinera. Ciena also guided third-quarter revenue to around $1.625 billion and lifted its full-year forecast to $6.3 billion.

The confirmation from Ciena lands as Nokia’s own shares take a breather after an explosive run. The stock slipped nearly 3 percent on Friday to €13.81, roughly 8 percent below the 52-week high of €14.97 set just two days earlier. Thursday’s session in Helsinki was even more dramatic, with a decline of over 6 percent on volume exceeding 20 million shares — well above the daily average. The trigger was not a negative news event but a valuation that had become stretched: a price-to-earnings ratio north of 100, following a multi-day rally that had included daily gains of up to 8 percent.

That momentum was built on a transformation that has reshaped Nokia’s identity. In the first quarter of 2026, the company’s AI and cloud revenues grew 49 percent on a currency-adjusted basis, with AI-related orders worth around €1 billion coming in during the period alone. Customers such as OpenAI and CoreWeave were named. Nvidia itself invested roughly $1 billion in Nokia in October 2025 at $6.01 per share, taking a 2.9 percent stake, and has been collaborating on AI-RAN technology that embeds AI capabilities directly into mobile networks.

Nokia’s optical networks division grew 20 percent in Q1, while the broader network infrastructure segment expanded 6 percent. The company’s guidance for 2026 calls for operating profit between €2.0 billion and €2.5 billion, with network infrastructure growth of 12–14 percent and the combined IP and optical segment expected to expand 18–20 percent. The optical book-to-bill ratio stood well above 1.0, signalling further order momentum.

The Infinera deal, completed on 28 February 2025, deepened Nokia’s footprint among hyperscalers and in North America. Management aims to extract more than €200 million in net synergies from the acquisition by 2027. That timeline will be watched closely as the market shifts from viewing Nokia as a legacy telecom supplier to a pure-play AI infrastructure play.

Analysts remain broadly constructive. Nordea recently lifted its price target from €10.50 to €15.70 while reiterating a buy rating. Northland is more aggressive, setting a $20.00 target in the US. Yet the risk is squarely on execution. With the stock trading at more than double its 200-day moving average of €6.68 and a 30-day annualised volatility above 76 percent, the high valuation leaves no room for disappointment.

Nokia’s next major checkpoint arrives on 23 July, when it reports second-quarter figures. The company has already flagged a sequential revenue increase of 5 to 9 percent. For a stock that has more than doubled since the start of the year, the question is whether that growth will be enough to sustain the triple-digit P/E — or whether Ciena’s validation is merely a prelude to Nokia’s own proving ground.