Bank of America downgraded Ciena from Buy to Neutral, citing growing caution on near-term AI-driven networking spending. The firm noted valuations across networking stocks have climbed well above historical norms, while hyperscaler capital expenditure growth is expected to slow next year. BofA forecasts hyperscaler capex growth of 39% in 2026, down from 68% in 2025.

This shift could redirect investor focus toward order trends, backlog, and deferred revenue. With those metrics near peak levels, BofA sees a more challenging near-term setup. The bank remains constructive on AI infrastructure long-term, viewing it as a structural shift that will drive sustained demand for compute, storage, and networking, with AI networking spending projected to rise 28% annually through 2029.

Enterprise adoption of agentic AI faces practical hurdles, including weak data readiness and limited operational controls. These factors, alongside a shift to consumption-based pricing, could slow initial spending as customers assess returns. BofA maintains Buy ratings on Cisco and Arista, citing their balanced risk-reward profiles, while warning that some rationalization in network spending is possible as cloud providers wait for demand to scale.