Investing.com -- Jefferies and Morgan Stanley raised their price targets on Ciena (NYSE:CIEN) stock, a move that comes following the company’s recent webcast, where it discussed AI's impact on its business strategy more extensively than before.

Jefferies analysts raised their price target on the stock to $80 from $65, citing the company's structural advantage in the optical space and new growth opportunities related to AI.

The new target is based on 22.7x their calendar year 2025 earnings per share (EPS) estimate, up from 15.4x, reflecting the potential for higher upside in Ciena's business model and reduced risks from customer inventory and pluggables.

Analysts were particularly impressed by Ciena's vision for traffic growth driven by cloud and AI, which could exceed the historical average of 25-30%. They noted that while AI traffic growth is currently concentrated within data centers, the physical limitations of GPUs will likely necessitate broader optical network connections in the future.

“While most of today's AI traffic growth is contained inside the Data Center, power, space, and cooling constraints associated with GPUs make it clear that clusters will eventually have to be spread out – connected by Optical networks,” Jefferies analysts wrote.

Separately, Morgan Stanley also voiced confidence in Ciena's growth prospects, particularly in its intra-data center and long-haul direct current interconnect (DCI) positioning.

The firm increased its price target on Ciena shares from $60 to $63.

Morgan Stanley analysts believe that coherent technology in data centers could be an additional upside driver for Ciena's growth targets, contributing to the company's performance beyond the traditional 6-8% growth range.

Moreover, Coherent’s foray into data centers, which is likely a 2026 theme, would be “an incremental market opportunity,” analysts noted.

“While timing of seeing upside to medium term targets from AI still uncertain, in combination with service provider recovery, pluggables, routing, MOFN, we feel like there are opportunities for upside in FY25 that leave us Overweight, with some of the AI drivers likely coming after that,” they added.

Ciena shares rose around 0.8% following the market open on Wednesday.

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