We came across a bullish thesis on Cogent Communications Holdings, Inc. (CCOI) on Twitter by Aaron Chan. In this article, we will summarize the bulls’ thesis on CCOI. Cogent Communications Holdings, Inc. (CCOI)’s share was trading at $73.02 as of Jan 15th. CCOI’s trailing P/E was 105.83 according to Yahoo Finance.
A technician installing high-speed internet cables.
Cogent Communications (CCOI) is nearing the completion of a transformative network reconfiguration project that began over 18 months ago, aimed at constructing a purpose-built wavelength network. This initiative has involved significant enhancements across its entire footprint to enable seamless any-to-any data center connectivity. The pivotal element of this transformation is the deployment of a ROADM-enabled network across major metro hubs and regeneration sites. ROADMs (Reconfigurable Optical Add-Drop Multiplexers) automate long-haul wave routing between metro areas, eliminating the need for manual intervention. For instance, a customer requiring connectivity from Los Angeles to Atlanta can now rely on automated routing through intermediate hubs like Phoenix, El Paso, and Dallas, with ROADMs seamlessly directing traffic at each point. Combined with standardized Ciena RLS equipment, this allows for software-driven configuration, reducing manual effort, standardizing operations, and improving scalability.
This network reconfiguration aligns with Cogent’s broader strategy of building operationally and financially scalable infrastructure. By leveraging a standardized ecosystem of equipment, fiber, and OSS/BSS tools, Cogent has achieved lower fixed and marginal costs while improving service installation times. These advancements underpin its ability to deliver commodity-like services at scale, supported by an aggressive sales force. Cogent’s model has already made it the largest carrier of internet traffic globally, and the company is now poised to disrupt the wavelength market with its latest innovation.
Cogent’s new network, combining Sprint’s fiber assets with its extensive data center connectivity, offers unparalleled geographic ubiquity and physical diversity, with 90% of its routes running uniquely along railroads. Hyperscale companies, known for their rigorous testing and SLA requirements, have already committed significant capacity to Cogent’s network, validating its reliability and performance. These companies often demand diverse paths and providers to ensure 99.999% uptime, a need Cogent’s network is well-positioned to meet. With the wavelength network now fully operational and broadly available to customers for the first time, Cogent is entering a new phase of growth, targeting both route diversity for existing customers and disruptive opportunities in the market.
As Cogent markets this state-of-the-art network, 2025 is expected to be a breakthrough year, marked by a significant acceleration in its wavelength business. This initiative not only positions Cogent as a leader in the wavelength market but also sets the stage for substantial long-term growth and value creation.
Cogent Communications Holdings, Inc. (CCOI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held CCOI at the end of the third quarter which was 22 in the previous quarter. While we acknowledge the risk and potential of CCOI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CCOI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.