Ciena Corporation (NYSE:CIEN) stock plunged nearly 17% on Thursday as investors weighed the company’s fiscal second-quarter results and outlook after a strong 12-month rally in the stock.

After climbing more than 530% over the past year, Ciena entered the quarter with lofty expectations tied to the AI data center buildout. As a result, even a strong earnings beat and improved outlook were insufficient to satisfy investors looking for additional upside catalysts.

The networking equipment company reported fiscal second-quarter revenue of $1.57 billion, up from $1.13 billion a year earlier and ahead of analyst estimates of $1.51 billion. Adjusted earnings rose to $1.64 per share from $0.42 a year ago, topping Wall Street expectations of $1.46 per share.

Profitability also improved. Adjusted gross margin expanded to 44.9% from 41.0%, while adjusted operating margin increased to 19.5% from 8.2%, driven by engineering cost reductions, product mix improvements and pricing optimization.

AI Demand Continues To Accelerate

Chief Executive Officer Gary Smith said demand tied to artificial intelligence is driving stronger spending by cloud providers and telecom customers, supporting backlog growth and expanding opportunities in wide-area networking and data center connectivity.

Smith said Ciena now expects ...