Ciena (CIEN) is well-positioned to benefit from "robust" spending on cloud infrastructure and data centers, with key players adding "significant" capacity in the next three years, BofA Securities said in a note Friday.

After reviewing data center expansion plans and updated spending outlooks from major companies, the brokerage said its concerns of a cloud spending slowdown were premature. BofA described the current cycle as a "super-cycle" seen to continue into 2027, driven by rising demand for bandwidth and data center buildouts through 2028.

"Ciena's portfolio is well suited to address the scale across growth opportunities, with longer-term opportunity in the local area networks," the brokerage said.

However, there are some risks, according to the note. The optical market is cyclical and current demand could partly reflect early ordering due to supply constraints. The stock's valuation is also high and could compress once the cycle slows down, while component shortages could raise costs and pressure margins in the future, the brokerage said.

BofA Securities upgraded Ciena to buy from neutral, and increased its price target to $355 from $260.

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