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Dell’Oro said the optical transport market is now forecast to surpass $18 billion in manufacturer revenue for the first time since 2000, driven largely by network infrastructure investments tied to AI data centers
In sum – what to know:
AI-driven growth – Dell’Oro now forecasts the optical transport market to grow 16% in 2026, fueled largely by AI-related data center interconnect demand.
Supply constraints – Optical vendors are reporting extended lead times and growing backlogs, with some delivery timelines stretching beyond 12 months.
DCI momentum – Cloud provider spending on optical transport equipment for data center interconnect rose 50% year-over-year in the first quarter of 2026.
The global optical transport equipment market is expected to grow 16% in 2026 as AI infrastructure deployments accelerate demand for data center interconnect (DCI) capacity, according to new figures from Dell’Oro Group.
The research firm said the market is now forecast to surpass $18 billion in manufacturer revenue for the first time since 2000, driven largely by network infrastructure investments tied to AI data centers.
“We raised our full year 2026 forecast from 10% to 16% following standout results in the first quarter of 2026,” said Jimmy Yu, vice president at Dell’Oro Group.
“We estimate that the optical transport market grew 20% year-over-year in the first quarter of this year, driven by demand for data center interconnect. However, many key optical suppliers are noting a growing backlog of orders as lead times continue to stretch out. We think supply may be the biggest factor keeping the optical transport market’s growth rate from being even higher this year due to all the AI data center build-outs,” Yu said.
According to Dell’Oro, direct purchases of optical transport equipment for DCI applications increased an estimated 40% year-over-year in the first quarter of 2026.
In comments to RCRTech, Yu said cloud providers are playing a central role in the market acceleration. “Cloud provider purchases of optical transport equipment for DCI increased 50% year-over-year in the first quarter of 2026. I think a large amount of this growth was related to AI infrastructure,” he said.
Dell’Oro also highlighted mounting pressure across the optical supply chain as vendors struggle to keep pace with rising demand.
Yu noted that suppliers are increasingly reporting longer product lead times and expanding order backlogs.
“Two optical systems vendors, Ciena and Nokia, have mentioned that product lead times are extending to over 12 months and that they have a growing order backlog. Ciena mentioned that its backlog had reached $7 billion back in January 2026,” he added.
“While I am sure one or two components are constrained at this point, I suspect that as demand continues to increase, most optical components will have longer lead times, placing additional pressure on the entire system,” he added.
Regional trends were mixed during the quarter. North America, Europe and the Middle East and Africa regions recorded year-over-year growth, while Asia-Pacific and Latin America declined.
On a trailing four-quarter basis, the leading optical transport system vendors were Huawei, Ciena, Nokia, and ZTE, which together accounted for more than 80% of market revenue, according to Dell’Oro.
In the IPoDWDM ZR/ZR+ segment, the leading vendors were Marvell Technology and Cisco’s Acacia business.
