OFC2025, San Francisco—A group of CEOs speaking at the Optica Executive Forum during OFC 2025 agreed that the optical industry’s growth in AI is still in its early stages.
There has been some concern in certain quarters that the AI opportunity may not be as rosy as everyone thinks.
According to a recent Bloomberg report, a myriad of issues, including uncertainty from President Trump’s tariffs, government spending cuts, and a possible recession, have driven new concerns that an AI bubble is about to burst, as the Nasdaq declined 8.3% in the most recent quarter.
However, Gary Smith, CEO of Ciena, who lived through the so-called telecom nuclear winter in the early 2000s, when companies adopted a "build it and they will come" mentality, said that the AI movement is not the same.
“The difference now is that the companies investing are well-financed,” Smith said.
He cautioned, “These things are not a straight line, and you’ll experience some fluctuations; it won’t always go up to the right.”
Network investment needed
While there is plenty of new investment in AI-based companies, the reality is that the data centers serving as the engine will need robust network connectivity.
There continues to be talk about finding ways to acquire power and fire up GPUs, but Smith said that these elements all need a network to enable them.
“We’re finally getting to the point where they're looking at a network to put it on,” he said. In my opinion, the network has been underinvested.
In its first-quarter earnings report, Ciena reported that its cloud customers are leveraging Ciena’s Managed Optical Fiber Networks (MOFN). Through its strategic relationships, Ciena enables service providers to design and build a dedicated optical network tailored to the hyperscaler’s unique architecture and technology needs.
Service providers can offer tailored solutions for hyperscaler networks by leveraging Ciena’s data center interconnect (DCI) platforms, open line systems (OLSs), and coherent optics.
“On the systems side, we’re seeing a ramping demand from a network perspective, and I don’t see that changing for the foreseeable future,” Smith said. “If you’re going to monetize AI, it has to come out of the data center.”
A long-term vision
While concerns about AI possibilities will persist, optical CEOs agree that the industry needs to adopt a long-term perspective.
AI has become a key investment target for the optical networking industry.
Coherent is seeing demand for AI applications is having a positive effect on its lasers, which are widely used in semiconductor manufacturing tools needed to make the chips that enable AI technologies.
Coherent’s CEO Jim Anderson is seeing a similar phenomenon.
“There’s no way you could argue that we’re at the end of the AI cycle,” he said. “If you consider the adoption curve of AI technology, we’re in the first inning and are just scratching the surface of what this technology can do across all industries.”
He added that there will be “some peaks and valleys along the way, but it’s a growth factor for the industry for at least the next decade.”
Lumentum, which demonstrated an integrated 450G optical interface at OFC 2025 through a partnership with Marvell, also sees a long-term investment cycle.
“No market is up forever and there will be ebbs and flows,” said Michael Hurlston, CEO of Lumentum. What’s different here is that there are other use cases, including investment, that can be moved from the data center, data center interconnect, and long-haul. Therefore, companies that offer a diverse range of products will be the ones that win and navigate the ebbs and flows.
He added that he agreed with Smith’s assessment that “the WAN needs more investment and build-out, and we’re focused on having the breadth of the portfolio to ensure we have offerings that can be integrated into other pieces of the build-out.”
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