Ciena (CIEN) is well positioned for artificial intelligence opportunities and investor recognition of this fact has boosted the price of its shares, but upside to near term expectations is more limited, Morgan Stanley said in a note to clients on Monday.

The investment firm downgraded Ciena to equal-weight from overweight and kept the price target at $63.

Ciena's stock price has increased about 45% year-to-date backed by investors' recognition of AI opportunities and also because service provider spending has increased, Morgan Stanley said.

"From here, we see upside to stock being driven more by EPS and AI-story, both of which we see as greater FY26 drivers," the note said.

However, Morgan Stanley noted its estimates may be "too conservative if AI attributed revenue is meaningful in FY25 or telco recovery stronger than expected coming out of inventory digestion."

"We would be buyers of any pullback on name, as we still like long term positioning to capture AI upside," the investment firm said.

Price: 64.10, Change: -0.02, Percent Change: -0.03