We recently published a list of 10 AI News You Should Take a Look At. In this article, we are going to take a look at where Ciena Corporation (NYSE:CIEN) stands against other AI news you should take a look at.
DeepSeek has gained attention for creating a high-performing model, R1, at a fraction of the typical cost. Its efficient use of resources and open-source approach has prompted discussions on the traditional reliance on expensive AI chips. Despite concerns about reduced demand for high-end semiconductors, experts argue that the growing need for compute power, driven by large-scale AI models, continues to fuel demand for advanced AI infrastructure.
Growing AI Competition Promises Exciting Advancements and Opportunities
As AI continues to evolve, new advancements are pushing the boundaries of performance, cost-efficiency, and accessibility, creating a dynamic landscape for both established players and new competitors. Bernstein analyst Peter Weed highlighted DeepSeek’s potential to drive AI adoption by offering cost-efficient inferencing, which could lead to increased demand.
While some speculate on the impact on AI infrastructure vendors, the firm suggested that software vendors providing data infrastructure, identity management, observability, and communications may be the key beneficiaries. Lower AI model costs could accelerate enterprise adoption, moving projects from proof-of-concept to production faster, and benefit a range of software vendors that have previously lagged behind hyperscalers in growth.
Weed noted:
“If Deepseek puts pressure to further bring down model cost, it may not only increase the number of viable projects but also may accelerate the pace of new projects going into production. This would benefit all the software consumption infrastructure above the hyperscaler level.”
Additionally, in a post on X, Sam Altman acknowledged DeepSeek’s R1 model as impressive, especially for its cost, but emphasized that OpenAI plans to release superior models. He expressed excitement about the competition and reiterated OpenAI’s focus on its research roadmap, highlighting the growing demand for AI and the importance of increased computing power to achieve advancements, including AGI.
For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of telecom engineers discussing a communication infrastructure diagram.
Ciena Corporation (NYSE:CIEN)
Number of Hedge Fund Holders: 40
Ciena Corporation (NYSE:CIEN) offers hardware and software solutions for video, data, and voice traffic delivery, including networking platforms, automation software, and global services for communication networks worldwide.
On January 28, JPMorgan upgraded Ciena (NYSE:CIEN) to Overweight from Neutral and raised its price target to $88 from $84. Analyst Samik Chatterjee noted limited near-term impact on CIEN’s fundamentals despite concerns over AI model capital efficiency. The upgrade was made due to strong cloud provider capex, telecom recovery, and investments from MOFN providers in data center connectivity. Key drivers include recovering telecom capex, rapid data center interconnect investments, and attractive valuation at 19x CY26 EPS. JPMorgan forecasts 8%-11% growth for FY25 and FY26, attributing a 24x target multiple for upside. Chatterjee noted:
“While we remain cautious about lofty valuations for Optical companies, the recent pullbacks offer attractive opportunities. Among Optical names, our relative rank order is COHR, followed by LITE, and then CIEN. In Optical components, we see stronger growth and margin levers tied to datacenter densification and next-generation datacom technologies, offering more premium opportunities compared to system providers like CIEN.”
Overall, CIEN ranks 7th on our list of AI news you should take a look at. While we acknowledge the potential of CIEN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CIEN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
