Can ION Network's Adoption of WL6e Boost CIEN's Optical Momentum?

Indonesia’s rapidly expanding digital economy is creating an urgent need for high-capacity, resilient connectivity. As cloud computing, AI, data centers, streaming and digital services drive up bandwidth consumption, network operators are investing heavily in submarine cables and advanced optical infrastructure. Against this backdrop, ION Network’s deployment of Ciena Corporation CIEN WaveLogic 6 Extreme (WL6e) on its new ION Cable System 1 (ICS1) represents an important opportunity for both companies.

ION Network is deploying WL6e on ICS1, a new submarine cable spanning more than 2,000 kilometers between Jakarta and Singapore via submarine and protected terrestrial routes in Sumatra. The network will run on Ciena’s 6500 platform, supporting wavelength services up to 1.2 Tb/s, while the broader system is designed for up to 24 Tb/s of end-to-end capacity. Across six cable segments using two fiber pairs, ION expects total capacity to reach 288 Tb/s. ICS1 is scheduled to go live toward the end of 2026.

The deployment also leverages Ciena’s Layer 0 control-plane capabilities, which should help ION improve service availability and operational efficiency. The move also strengthens Ciena’s position in the rapidly developing Southeast Asian optical networking market. Ciena previously partnered with ION Network, as the operator uses Ciena optical technology for its B3JS (Jakarta-Bangka-Bintan-Batam-Singapore) and BDMCS (Batam-Dumai-Medan) cable systems.

Moreover, WL6e adoption continues to broaden. In the fiscal second quarter, Ciena expanded WL6e to 110 customers, adding 20 new users. Ciena's optical networking revenue reached $1.1 billion, up from $774 million a year earlier. It also raised its fiscal 2026 revenue outlook to $6.3 billion (+/-$100 million), representing roughly 32% growth at the midpoint. However, competition in coherent optics remains intense, with vendors such as Nokia NOK and others competing for carrier and hyperscaler spending.

Competition Heats Up in CIEN’s Optical Market

Growth in optical networking and demand from AI and cloud customers is driving NOK. During the second quarter, AI and Cloud revenue more than doubled year over year while order intake reached €2.8 billion, reflecting broad demand across Optical Networks and IP Networks. Network Infrastructure delivered double-digit growth, supported by continued momentum in Optical Networks and IP Networks. The planned divestiture of the Fixed Wireless Access CPE business simplifies the portfolio and allows greater investment in higher-growth opportunities such as AI networking and optical technologies. Management noted that supply constraints continue to affect portions of the optical networking market, contributing to longer-term customer ordering patterns.

Corning Incorporated GLW continues to strengthen its competitive position through innovation across optical connectivity, advanced glass and semiconductor applications. Corning is also expanding its GenAI optical portfolio with multicore fiber and high-density connectivity solutions that improve network capacity and reduce installation complexity. Secular demand for bandwidth, cloud computing and AI infrastructure continues to support Corning’s Optical Communications business. First-quarter Optical Communications sales increased 36% year over year, while segment net income rose 93%. The NVIDIA partnership includes plans to increase U.S. optical connectivity manufacturing capacity tenfold and expand domestic fiber production capacity by more than 50%.

CIEN Price Performance, Valuation and Estimates

Shares of CIEN have gained a whopping 361.1% in the past year compared with the Communications - Components industry’s surge of 218.6%.

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CIEN trades at a forward 12-month price-to-earnings (P/E) ratio of 50.76, above the industry’s 40.46.

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The Zacks Consensus Estimate for CIEN’s earnings for fiscal 2026 has remain unchanged over the past 60 days.

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CIEN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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