Market Overview - U.S. stock markets have started 2026 positively, with all three major stock indexes trading in positive territory, supported by strong domestic economic fundamentals, solid fourth-quarter 2025 earnings, accommodative Fed policies, and resolution of trade issues [1] Investment Recommendations - Investing in growth stocks is recommended for February, focusing on stocks with aggressive earnings or revenue growth to enhance portfolio performance [2] Growth Stock Picks - Five recommended growth stocks include Micron Technology Inc. (MU), MongoDB Inc. (MDB), Amphenol Corp. (APH), Ciena Corp. (CIEN), and Seagate Technology Holdings plc (STX), all with a Zacks Rank 1 (Strong Buy) and a Growth Score of A [3] Micron Technology Inc. (MU) - Micron is a leader in AI infrastructure, driven by strong demand for high-bandwidth memory (HBM) solutions, with record sales in the data center market and increasing HBM adoption boosting DRAM revenues [6][10] - The growing adoption of AI servers is reshaping the DRAM market, increasing demand for high-capacity DIMMs and low-power server DRAM, with Micron capitalizing on this trend through a strong product roadmap, including HBM4 set for production in 2026 [7] - Micron's diversification strategy has stabilized its revenue base by shifting focus from volatile consumer electronics to more resilient sectors like automotive and enterprise IT [8] - Expected revenue and earnings growth rates for Micron are 96.1% and over 100%, respectively, for the current year ending August 2026, with a recent earnings estimate improvement of 0.1% [10] MongoDB Inc. (MDB) - MongoDB has expanded its Atlas platform beyond database management into analytics, targeting agile development and modern workloads to leverage the generative AI trend [11] - The company has seen continued platform adoption across enterprises and startups, with a focus on larger enterprises enhancing deal sizes and sales efficiency [12] - Recent product initiatives include new AI embedding models and integrations with tools like GitHub Copilot, strengthening its position in AI-driven applications [13] - Expected revenue and earnings growth rates for MongoDB are 17.8% and 17.2%, respectively, for the current year ending January 2027, with a recent earnings estimate improvement of 0.2% [14] Amphenol Corp. (APH) - Amphenol benefits from a diversified business model, with a strong portfolio in high-technology interconnect products, commanding an estimated 33% market share in AI-powered data center interconnects [15] - Increased spending on defense technologies and strong demand across Commercial Air, Industrial, and IT Datacom sectors support top-line growth [16] - Rising AI workloads and cloud infrastructure upgrades are driving demand for high-speed interconnects, with steady growth expected in the Interconnect and Sensor Systems segment [17] - Expected revenue and earnings growth rates for Amphenol are 34.9% and 29.3%, respectively, for the current year, with a recent earnings estimate improvement of 6.4% [18] Ciena Corp. (CIEN) - Ciena's fiscal fourth-quarter showed a 20% year-over-year revenue increase and 69.5% EPS growth, driven by AI-led demand from cloud and service provider customers [19] - Networking Platforms revenues rose 22% to $1.05 billion, with strong growth in Optical and Routing and Switching segments [20] - Ciena has raised its fiscal 2026 revenue outlook to $5.7-$6.1 billion, reflecting nearly 24% growth at the midpoint, driven by demand from cloud and AI infrastructure [21] - Expected revenue and earnings growth rates for Ciena are 24.1% and over 100%, respectively, for the current year ending October 2026, with a recent earnings estimate improvement of 20.2% [23] Seagate Technology Holdings plc (STX) - Seagate is experiencing strong execution amid rising cloud and AI demand, with a focus on balancing performance and cost efficiency in modern data centers [24] - High-capacity nearline production is booked through 2026, with long-term contracts providing strong demand visibility through 2027 [25] - Seagate's aerial density roadmap offers a competitive advantage in hard drives, aligning with the growing demand for AI-driven data storage solutions [26] - Expected revenue and earnings growth rates for Seagate are 24.6% and 55.9%, respectively, for the current year ending June 2026, with a recent earnings estimate improvement of 11.8% [28]

The Zacks Communication - Components industry appears well poised to capitalize on the healthy demand trends driven by the fast-track 5G deployment and the transition to cloud and fiber networks. However, volatility in prices due to elevated customer inventory levels, high capital expenditure for infrastructure upgrades, margin erosion, geopolitical conflicts and tariff wars has dented the industry’s profitability.Nevertheless, Corning Incorporated (GLW) , Ciena Corporation (CIEN) and Ooma, Inc. (OOMA) are ...

Industry Overview - The Communication Components industry is benefiting from strong demand trends and an increasing user inclination towards digital innovations, leading to a significant demand for quality networking components [1] - The industry is currently ranked in the top 23% of the Zacks Industry Rank, with a remarkable 112% return over the past year and a 29.3% return over the last three months, indicating expected outperformance in the next three to six months [2] Company Highlights Ciena Corp. (CIEN) - Ciena reported a 20% year-over-year revenue increase and 69.5% EPS growth in its fiscal fourth quarter, with a record order backlog of $5 million, driven by AI-led demand from cloud and service provider customers [6][9] - The company’s Networking Platforms revenues rose 22% to $1.05 billion, supported by a 19% growth in Optical and a 49% increase in Routing and Switching due to DCOM demand [7] - Ciena has raised its fiscal 2026 revenue outlook to $5.7-$6.1 billion, reflecting nearly 24% growth at the midpoint, up from a prior estimate of 17% [7] - The company expects to enhance profitability through a balanced mix of new and existing customers, with its portfolio maintaining a technology lead of 18-24 months [8] - Ciena has an expected revenue growth rate of 24.2% and an earnings growth rate of over 100% for the current year [10] Lumentum Holdings Inc. (LITE) - Lumentum designs and manufactures optical and photonic technologies, with a focus on high-speed telecommunications and data centers, supporting the growth of AI and cloud computing [11] - The company has seen momentum in its shares due to rising AI demand, developing photonic solutions for AI applications, particularly in data centers [13] - Lumentum has a strong collaboration with NVIDIA for developing silicon photonics, enhancing its offerings in the AI space [14] - The expected revenue growth rate for Lumentum is 56%, with earnings growth projected to exceed 100% for the current year [14] Corning Inc. (GLW) - Corning focuses on developing advanced cover materials, with its Gorilla Armor 2 material being deployed in Samsung's Galaxy S25 Ultra devices [15] - The company offers a range of products for data centers, including optical fiber and connectors, positioning itself well for long-term growth [16] - The adoption of innovative optical connectivity products for generative AI applications is anticipated to drive growth for Corning in the upcoming quarters [17] - Corning has an expected revenue growth rate of 11.2% and an earnings growth rate of 20% for the current year [18]

Market Overview - The U.S. stock market experienced a rally in 2023 and 2024, continuing into 2025, with the Dow, S&P 500, and Nasdaq Composite increasing by 13%, 16.4%, and 20.4% respectively [1] - December 2024 showed mixed results, with the Dow and S&P 500 rising by 0.7% and 0.3%, while the Nasdaq Composite fell by 0.5% due to profit booking in AI-centric technology stocks [2] - Strong fundamentals, solid fourth-quarter earnings projections, and accommodative Fed policies are expected to support market momentum in January 2025 [3] Investment Opportunities - Stocks with favorable Zacks Rank and momentum are recommended for investment in January, including Robinhood Markets Inc. (HOOD), MongoDB Inc. (MDB), Samsara Inc. (IOT), Ciena Corp. (CIEN), and Core & Main Inc. (CNM) [4] Robinhood Markets Inc. - Robinhood operates a financial services platform allowing investments in various assets, including cryptocurrencies [5] - The company is focusing on growth through product innovation, including AI tools and global expansion, with new features like Cortex and Legend enhancing user engagement [6][8] - Robinhood's expected revenue and earnings growth rates are 22% and 20.6% respectively for the current year, with a 5.7% improvement in earnings estimates over the last 30 days [10] MongoDB Inc. - MongoDB has expanded its Atlas platform into analytics, targeting modern workloads and generative AI applications [11] - The company has seen strong adoption across enterprises, with a focus on larger deals and efficient customer acquisition [12] - Expected revenue and earnings growth rates for MongoDB are 17.5% and 17% respectively for the next year, with a significant 29.6% improvement in earnings estimates over the last 60 days [14] Samsara Inc. - Samsara connects physical operations data to its cloud platform, developing sensor systems for analytics [15] - The company's Connected Operations Cloud includes AI capabilities and is expected to see revenue and earnings growth rates of 19.8% and 12.9% respectively for the next year [16] Ciena Corp. - Ciena reported a 20% year-over-year revenue increase and 69.5% EPS growth, driven by AI demand from cloud and service providers [17] - The company expects revenue for fiscal 2026 to be between $5.7 billion and $6.1 billion, reflecting nearly 24% growth at the midpoint [19] - Ciena's expected revenue and earnings growth rates are 24.3% and 97.7% respectively for the current year, with a 19.7% improvement in earnings estimates over the last 30 days [21] Core & Main Inc. - Core & Main distributes water and fire protection products to various markets in the U.S. [22] - The company has an expected revenue and earnings growth rate of 3% and 7.7% respectively for the next year, with a 24.4% improvement in earnings estimates over the last 30 days [24]

Core Insights - Ciena Corporation (CIEN) is set to report its fourth-quarter fiscal 2025 results on December 11, with earnings estimated at 76 cents per share, reflecting a 40.7% increase year-over-year, and revenues projected at $1.3 billion, indicating a 14% rise from the previous year [1] Group 1: Earnings and Revenue Expectations - The Zacks Consensus Estimate for Ciena's earnings remains unchanged over the past 60 days, with a projected revenue range for the fourth quarter between $1.24 billion and $1.32 billion [1][8] - Ciena has surpassed the Zacks Consensus Estimate in two of the last four quarters, with an average earnings surprise of 13.9% [2] Group 2: Key Drivers of Performance - The fiscal fourth-quarter performance is expected to be driven by strong demand across Cloud Provider and Service Provider segments, with direct Cloud Provider revenues increasing by 94% year-over-year in the fiscal third quarter [3] - Significant investments in AI by cloud providers are anticipated to contribute to revenue growth, with over $7 trillion projected to be invested globally in data centers, GPUs, power infrastructure, and AI models by 2030 [3] Group 3: Strategic Focus and Product Development - Ciena is prioritizing R&D in Coherent Optical Systems and Interconnects while scaling back on residential broadband investments, focusing on long-term opportunities in AI-driven traffic growth [4] - The company’s portfolio, including WaveLogic and RLS solutions, is recognized as an industry benchmark for AI-ready networks, positioning Ciena to capitalize on high-speed connectivity demand [5] Group 4: Recent Business Developments - Ciena secured a major North American AI infrastructure project, utilizing its RLS platform and WaveLogic 6 Nano 800G ZR technology, with revenues expected to grow significantly over the coming quarters [5] - Recent partnerships and upgrades, such as Fidium's launch of 400G wavelength services and Colt's deployment of a high-capacity network, highlight Ciena's technological advancements and market position [10][11] Group 5: Revenue Projections for Business Units - Blue Planet revenues are expected to surge by 46.3% year-over-year to $34.3 million, with Global Services and Platform Software and Services projected to reach $157.7 million and $114 million, reflecting year-over-year increases of 11% and 14.4%, respectively [7] - The interconnects portfolio is anticipated to double revenues in 2025, supported by strong demand for routing and switching solutions [6]

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