Shares of Ciena Corporation (NYSE:CIEN) rose 3.3% Friday after Bank of America upgraded the optical networking company to Buy, citing surging demand from cloud data centers.

The upgrade reflects expectations of continued strong spending by cloud providers, including hyperscalers, Tier-2 clouds, and emerging “Neoclouds,” which are adding significant data center capacity over the next three years. Bank of America said Ciena’s portfolio, which includes 800G and 400G pluggables, line systems, and its recent acquisition Nubis, is well-positioned to capitalize on these growth opportunities.

“Houston, it’s too early to get cautious,” analysts wrote, noting that its previous caution on potential spending slowdowns in the networking sector was premature.

Analysts highlighted that Ciena’s FY26 revenue growth guidance has surged to 28% from 8% a year ago, with backlog rising $2 billion in a single quarter to $7 billion.

Bank of America also flagged long-term opportunities in local area networks and Co-Packaged Optics through Ciena’s Nubis acquisition, as well as passive optical network solutions now in trials with additional hyperscalers.

The firm also raised its price target to $355 from $260.

The bank acknowledged risks including the cyclical nature of the optical market, high valuation levels, and tight supply of EML lasers that could pressure margins, but said these are outweighed by the strong demand environment.