In this article, we will list the 5 Best Optical Networking Stocks to Buy According to Analyst. Please visit 10 Best Optical Networking Stocks to Buy According to Analyst if you would like to see the extended list and the methodology behind it.
5. nLight, Inc. (NASDAQ:LASR)
Stock Upside: 6.95%
Number of Hedge Fund Holders: 34
nLight, Inc. (NASDAQ:LASR) is one of the best optical networking stocks to buy according to analysts. On May 21, Stifel analyst Ruben Roy raised his price target on nLIGHT, Inc. (NASDAQ:LASR) to $85 from $75, maintaining a Buy rating. Roy made the call after his firm hosted nLight’s executives.
The analyst noted that the key takeaway from the meeting was his firm’s growing faith in nLight’s directed energy portfolio, particularly the newly launched HADES product line. This product line is a range of high-power lasers designed for military applications.
Further, Stifel was encouraged by the opportunity for nLight to expand its laser sensing business. Here, Roy stated, nLight has the potential to substantially grow the volume of its components deployed across defense and industrial systems.
Stifel also came away more optimistic about international sales growth, said Roy. He noted that nLight has a credible path to winning additional programs outside the US This is because rising allied defense spending is creating a fertile environment for the company to extend its reach beyond domestic contracts.
The analyst also highlighted nLight’s Q1 FY2026 earnings, which the company shared on May 7. Quarterly revenue was $80.2 million, and adjusted EPS reached $0.22. In Q1 FY2025, the EPS was a loss of $0.04. Roy noted that these results validated nLight’s pivot with the launch of the HADES directed energy product line.
nLight, Inc. (NASDAQ:LASR) is a photonics and laser technology company that is tied to the optical networking and broader optical communications ecosystem through its high-power semiconductor lasers. The company designs and manufactures semiconductor and fiber lasers used in industrial, defense, and advanced manufacturing applications.
4. Lumentum Holdings Inc. (NASDAQ:LITE)
Stock Upside: 17.75%
Number of Hedge Fund Holders: 69
Lumentum Holdings Inc. (NASDAQ:LITE) is one of the best optical networking stocks to buy according to analysts. On May 19, AIXTRON SE announced that Lumentum Holdings Inc. (NASDAQ:LITE) had placed multiple orders for AIXTRON’s G10-AsP MOCVD systems. These are manufacturing equipment that Lumentum will use to scale up production of indium phosphide (InP)-based lasers and detectors for high-speed AI data center networks.
For context, InP-based lasers are the core components inside the optical transceivers that connect thousands of AI accelerator chips within data centers. Unlike older optical generations, these new lasers can handle massive bandwidth, which makes them ideal for AI model training and inference workloads. Lumentum supplies these components to some of the world’s largest hyperscalers.
The G10-AsP platform Lumentum ordered is AIXTRON’s latest MOCVD system. It is designed specifically for compound semiconductor materials like InP, and it gives Lumentum the ability to manufacture more chips per run with greater precision.
This order appears to be part of Lumentum’s capacity expansion push because on March 26, it announced plans for a new 240,000-square-foot manufacturing facility in Greensboro, North Carolina. Lumentum said it plans to use the facility to produce InP-based optical products. The company expects that facility to start operating in mid-2028, and it has committed several hundred million dollars to it.
Lumentum Holdings Inc. (NASDAQ:LITE) is an optical networking and photonics company. It designs and manufactures high-performance optical and laser-based components used in fiber-optic communication systems.
3. IPG Photonics Corporation (NASDAQ:IPGP)
Stock Upside: 26.05%
Number of Hedge Fund Holders: 17
IPG Photonics Corporation (NASDAQ:IPGP) is one of the best optical networking stocks to buy according to analysts. On May 6, Needham analyst James Ricchiuti upgraded IPG Photonics Corporation (NASDAQ:IPGP) from Hold to Buy and set a price target of $110. Ricchiuti made the move a day after IPG shared its Q1 FY2026 earnings report.
The analyst noted that IPG’s revenue came in at $265.5 million, which was 3% above Wall Street consensus and well ahead of management’s own guidance. Also, the year over year growth of 17% far outpaced the 12% Wall Street had anticipated. Ricchiuti also pointed to the book-to-bill ratio being above 1.0 as a particularly telling signal. In other words, the analyst views this metric as evidence that new orders are coming in faster than IPG is fulfilling them.
Ricchiuti acknowledged that IPG is currently spending more on operations as it invests to drive future revenue growth. For that reason, Needham raised its 2026 and 2027 revenue estimates but also slashed its 2026 EPS estimate. The analyst views this tradeoff as acceptable given the direction of the business.
The analyst also highlighted the Q2 FY2026 gross margin guidance as an encouraging signal. He noted that if demand continues on its current trajectory, the operating leverage in the business could deliver positive surprises at the earnings level. Put simply, Ricchiuti anticipates revenue growth to eventually outpace the cost increases and allow margins to recover more sharply than the market currently expects.
IPG Photonics Corporation (NASDAQ:IPGP) is a photonics and fiber laser company that provides high-performance laser technologies to the optical networking industry. The company designs and manufactures fiber lasers, amplifiers, and laser systems primarily used in industrial manufacturing, materials processing, and medical applications.
2. VIAVI Solutions Inc. (NASDAQ:VIAV)
Stock Upside: 31.29%
Number of Hedge Fund Holders: 28
VIAVI Solutions Inc. (NASDAQ:VIAV) is one of the best optical networking stocks to buy according to analysts. On May 19, VIAVI Solutions Inc. (NASDAQ:VIAV) priced a public offering of about 11.1 million shares of common stock at $45 per share. The offering closed just two days later on May 21, and generated approximately $500 million in net proceeds after underwriters exercised their 30-day option to purchase up to an additional 1,666,666 shares at the same offering price.
VIAVI said it plans to use most of the proceeds to repay the $450 million remaining principal balance on its Term Loan B. It will allocate the surplus to general working capital needs.
Separately, on May 5, VIAVI launched the CyberFlood CF1000, a native 400G security and application performance test appliance. VIAVI said it designed the appliance to help network equipment vendors, hyperscale data center operators, and service providers validate the reliability and security of complex, high-speed AI infrastructure before it goes live.
VIAVI stated that this product matters because, as data centers are rebuilt to support AI workloads, the traffic they carry is not only far faster and denser than before, but also far more encrypted and dynamic. However, traditional test systems were not built for this environment and leave critical blind spots in the validation process. As such, the company positions the CF1000 as the tool to close those gaps.
VIAVI Solutions Inc. (NASDAQ:VIAV) is an optical networking test, monitoring, and assurance company. It provides critical equipment for validating and maintaining fiber-optic communication networks. The company develops testing instruments, network performance monitoring systems, and assurance software that telecom operators, data center providers, and equipment manufacturers use to ensure the reliability and performance of high-speed optical networks.
1. Ceragon Networks Ltd. (NASDAQ:CRNT)
Stock Upside: 59.77%
Number of Hedge Fund Holders: 8
Ceragon Networks Ltd. (NASDAQ:CRNT) is one of the best optical networking stocks to buy according to analysts. On May 19, Ceragon Networks Ltd. (NASDAQ:CRNT) reported its Q1 2026 financial results, where revenue touched $85.0 million, down 4.1% year over year, but comfortably ahead of the Wall Street consensus of $80.4 million. CEO Doron Arazi attributed the year-over-year dip to a “timing issue.” This refers to the fact that large Indian operator orders only began converting into recognized revenue midway through the quarter.
“We are working closely with the customer and relevant component vendors on a catch-up plan,” Arazi told investors on the earnings call.
Nonetheless, India contributed 35% of the total revenue during the quarter. In fact, Arazi noted, this is the primary reason revenue beat estimates. The CEO added that by early May, the company had already booked roughly $86 million in orders from Indian operators year-to-date, and that these were concentrated in just two leading telecom providers. Of that, Ceragon recognized only about $24 million as revenue in Q1, and expects the remainder to flow through by year-end.
The quarter’s non-GAAP EPS came in at $0.01 per diluted share, compared to $0.03 per diluted share for Q1 2025. GAAP gross margin expanded from 32.8% to 35.4% year over year.
On his part, company CFO Ronen Stein stated that management reiterated its full-year 2026 outlook, where it expects revenue of $355 million to $385 million, non-GAAP gross margin improvement of 100 basis points at the midpoint of the revenue range, and non-GAAP operating margin of 6.5%-7.5%.
Ceragon Networks Ltd. (NASDAQ:CRNT) is a wireless transport and backhaul networking company that supports high-capacity communications infrastructure used alongside fiber and optical networks.
While we acknowledge the potential of CRNT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CRNT and that has 100x upside potential, check out our report about the cheapest AI stock.
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