Dan Niles
Founder & Portfolio Manager of Niles Investment Management
ADTRAN is in the right space, optical, with catalysts ahead: replacing Huawei gear in Europe, an initial BEAD revenue ramp in the second half of 2026, and building sales to de-lever the balance sheet. At about 1.3 times 2026 EV/sales, it is still cheap versus peers even after a 55% rally this year. The caveats are a market growing less tolerant of misses in AI-related names, including optical, and a series of execution missteps over the past two years compared with peers. x.comÂ
Adtran's new optical product now looks badly timed. After the earnings call it looks like a prototype, not even at sampling, while the market has moved past 100G per lane and 800G may be skipped faster than expected in favor of 1.6T and CPO. The CEO said in May that volume production should be ready in about a year, just as competitors bring much more capacity online. Customers like it and Adtran should find a place, but a smaller, slower revenue ramp makes the re-rating less compelling. x.comÂ
Nokia's Infinera business gives it a real position in the optical stack, but the market still prices it as a telecom story. The deeper opportunity is in silicon photonics and electro-optic modulators that eliminate the electrical-to-optical conversion bottleneck inside AI clusters, a shift analyst downgrades miss. @josephinvesting notes Handelsbanken cut Nokia to hold and calls it the most misunderstood optical networking play, with multiples compressed by its legacy telecom business. x.comÂ
ADTRAN is a key beneficiary of the ongoing global fiber networking rollout. x.comÂ
The optics trade, including Marvell, Ciena and Nokia, looks like fluff with no meat on the bone for investors to latch onto, and the same goes for CPU names like Arm and neoclouds like Nebius. Multiples are sky high and price action is terrible, with many names down about 35%. x.comÂ
Applied Optoelectronics is a domestic AI data-center bottleneck winner whose results show exponential operating leverage. EPS jumped 186% quarter over quarter and 138% year over year on an 86% revenue surge, as 800G transceiver economics improve with its Texas and Taiwan fabs reaching prime yields. With the US tightening restrictions on Chinese optical supply chains and the FCC banning new Chinese data-center hardware, hyperscalers are flooding it with high-margin orders. x.comÂ
Adtran is trading as if AI data centers do not exist. x.comÂ
Applied Optoelectronics is back in the junk bucket after dropping dilution news in Friday after-hours trading, a reminder of exactly who management is. Lumentum and Coherent are the calmer optical names to own instead. x.comÂ
ADTRAN could re-rate like Harmonic once the market understands its optical networking story, as it sits at the start of three tailwinds at once. US BEAD broadband funding should contribute substantially from late 2026; Europe's proposed Huawei removal favors ADTRAN as a primary Western alternative; and AI data center optics, a $154 billion TAM by 2028 per Goldman Sachs, fits its new LiteWave800. Q1 revenue rose 15.5% to $286.1 million, US revenue 42%, and operating margin reached 6.9%. x.com … Show more
Adtran rides three spending cycles still in their first innings. The US is spending $42.5B to bring fiber to every unserved household through 2028-plus, buying the OLTs, ONTs and optical transport Adtran makes; European telcos are replacing Huawei and ZTE gear, where Adtran has the only optical platforms approved for EU/NATO classified data; and an EU 2030 post-quantum mandate suits its ConnectGuard encryption. Revenue rose 15.5% to $286M, it is GAAP profitable, and it trades at 1.17x sales. … Show more
Adtran is an optical name still valued like dying copper broadband at about 1x sales, versus roughly 25x for Lumentum. Its LiteWave800 linear pluggable module uses 6-10x less power than first-gen LPO, and Goldman sees 800G holding meaningful share through 2028. Q1 revenue rose 15.5% with optical up 24%. Per the CEO, LiteWave reaches volume about a year out and large data centers aren't its sweet spot, so AI optics is a 2027 story. US broadband funding and EU Huawei replacement anchor the floor. … Show more