Shares of network equipment maker Ciena (CIEN 16.32%) soared on Thursday morning, following the release of a mixed earnings report paired with bullish guidance targets. The price jump peaked at 21.9% near 10 a.m. ET, cooling down to a 15% gain three hours later.

Mixed results and bullish guidance

Wall Street's consensus estimates for Ciena's fourth-quarter report pointed to adjusted earnings of roughly $0.65 per share on $1.1 billion in top-line revenues. Earnings fell 28% year over year to $0.54 per share while sales held almost perfectly steady at $1.12 billion.

So the headline numbers were a mixed bag, but that wasn't the whole story.

Inspired by rising market demand for high-speed optical networking solutions, Ciena CEO Gary Smith highlighted the long-term opportunities of cloud computing and artificial intelligence (AI) processing. As a result, Ciena now expects annual revenue growth of approximately 10% over the next three years, up from a compound average growth rate (CAGR) of 3.5% in the last three years.

A richer product mix raised costs in Q4 2024

The company ended fiscal year 2025 with an unfilled order backlog of $2.1 billion, up from $1.9 billion three months earlier. Ciena has all the market action it can handle and is revising its supply chain to make sure it can meet this explosive AI demand.

The soft bottom-line earnings resulted from a larger-than-usual write-off of obsolete and unsellable products, as Ciena's catalog moved away from older and slower products in favor of high-speed gear -- the kind enterprise customers with ambitious cloud and AI businesses prefer. The company also stepped up its selling and marketing budgets to take advantage of the incoming business opportunities.

Ciena's stock has now gained 89% in 52 weeks, outperforming the stock market and 25 of the 30 large companies in the communications equipment sector. The shares aren't cheap at this point, but Ciena supports its lofty valuation with muscular growth projections.