Gary Smith has run Ciena since May 2001, and he lived through the telecom crash that followed the fiber boom. Now the optical networking company's chief executive says the artificial intelligence buildout is a different kind of cycle, and he doesn't see it as a repeat of what came before.
Smith made the case in an interview with Steven Rosenbush of The Wall Street Journal. He acknowledged the scars from the last downturn. “Having lived through the pain of that, I’m suitably paranoid around all of this, right? As you’d expect,” Smith told the Journal.
Is the AI boom different from the telecom bust?
He said the differences between the two booms outweigh the similarities. The AI era will produce losing bets, he said, but those bets should be judged on their own terms rather than measured against the dot-com-era playbook.
From a $40 billion peak to a 90% fall
Ciena went public in the late 1990s in an initial public offering that valued the company at $3.4 billion, according to the Journal. Its market value later passed $40 billion. Then the bust hit, and the stock lost more than 90% of that value. The company is now worth about $45.75 billion.
Smith, 66, described AI demand as a series of waves. The first wave, linking data centers to each other, is still ramping up. Inference, the stage where businesses put trained models to work, is just getting started. AI agents come next, followed by robotics, he said.
“People have grossly underestimated the amount of infrastructure that’s going to be required,” Smith said.
Ciena has built 3-nanometer versions of its WaveLogic chips that send 1.6 terabits per second over a single strand of fiber. A 2-nanometer version is in development.
Unused fiber and the question of demand
How much fiber laid in the telecom boom went unused?
The telecom boom left a lot of capacity sitting idle. About 94% of the fiber laid during that period went unused, Citi analyst Heath Terry told the Journal in an earlier interview. Terry drew a line between that glut and the current market. “There are no dark GPUs,” he said.
Is AI infrastructure demand still outpacing supply?
Smith pointed to another difference. Today's buyers include highly profitable cloud giants, which can fund large projects from their own cash flow. The current picture, he said, is one of shortage rather than surplus. “Today, we haven’t been able to keep up with demand,” Smith said.
Ciena expects compound annual growth of 30% from fiscal 2026 through fiscal 2029, according to the Journal. The company also expects to end fiscal 2026 with an order backlog of about $10 billion.
Not everyone sees the spending the same way. Apollo's Torsten Slok said on Monday that U.S. companies outside the tech sector now treat AI spending as a cost. Gartner has warned of write-downs on AI infrastructure. Nvidia, meanwhile, has committed $170 billion to neoclouds, the newer cloud providers built around its chips.
Este artículo fue escrito con la asistencia de IA.
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