Track market-moving stories before they get noisy

Ciena Stock: Powering the AI Boom - A Network Infrastructure PlayExtreme Networks NASDAQ: EXTR is positioning its Wi-Fi 7 products, network automation software and expanding data center capabilities to benefit from an enterprise networking upgrade cycle tied to artificial intelligence, higher-bandwidth applications and security needs, according to Stan Kovler, the company’s senior vice president of corporate development and investor relations.

Speaking at an Oppenheimer event, Kovler said customers are increasingly moving to next-generation networking technology, including Wi-Fi 7, which offers greater bandwidth, reliability and more predictable connectivity. He said some customers are upgrading directly from Wi-Fi 4 or Wi-Fi 5 rather than moving through Wi-Fi 6 or Wi-Fi 6E.

Get Extreme Networks alerts:

Wi-Fi 7 Demand Driven by Venues, Video and Connected Systems
Arista Networks Advances the Era of AI and Microperimeters Kovler highlighted large venues as a key use case for higher-capacity wireless networks. Stadium operators are deploying thousands of Wi-Fi access points to support growing concurrent usage, including live streaming, video sharing, digital concessions and security applications.

“Now pretty much everyone is on Wi-Fi at a lot of these events,” Kovler said, citing the need to support users at venues such as large college football stadiums. He said Wi-Fi remains less expensive to deploy than 5G in many venue environments, estimating that Wi-Fi can be three to four times cheaper to deploy than a cell-site-based alternative.

Extreme Networks Snags an Upgrade on Inventory NormalizationThe company is also seeing networking demand expand into locations and applications that historically had less connectivity, including manufacturing facilities, retail checkout systems and airport passenger-processing systems. Kovler pointed to facial recognition, 4K video, factory automation and connected devices as examples of workloads requiring more network capacity and upgraded switching infrastructure.

Security is another driver, particularly in manufacturing and regulated industries. Kovler said Extreme’s fabric technology can create separate virtual networks for individual production lines, potentially helping contain a cyberattack within a limited area rather than allowing it to spread across an organization.

He also cited demand for sovereign-cloud-style deployments, in which government and regulated-industry customers operate management systems in protected environments instead of relying on public cloud infrastructure.

Platform ONE Expands AI Automation Features
Extreme Networks plans to roll out an upgrade to its Extreme Platform ONE software later in the month, Kovler said. The company calls the next-generation capability “Agent ONE,” which is intended to expand the use of AI in network administration.

According to Kovler, the platform initially focused on knowledge-based searches and helping network engineers find information. Future capabilities are expected to provide greater automation, including a “Coworker mode” that can schedule tasks and automate processes. A subsequent offering planned for introduction in October, called “Operator mode,” is designed to address agent-to-agent workflows and more autonomous network operations.

Kovler said the primary near-term productivity benefit should be faster troubleshooting and reduced mean time to resolution. AI can analyze logs and network events in an automated way, potentially allowing IT teams to identify and resolve issues more quickly than through manual processes, he said.

He characterized the economic benefit primarily as cost avoidance rather than immediate workforce reductions. As organizations and their networks grow, automated management tools could reduce the need to add personnel, he said.

Subscription Transition and Data Center Investment
Kovler said Extreme Platform ONE bundles support with AI-driven subscription management capabilities. The bundle represented 30% of the company’s subscription bookings in fiscal 2026 and reached 50% of subscription bookings in the fourth quarter, according to his remarks.

Extreme is transitioning customers from a discrete support model toward a SaaS-oriented subscription model. Kovler said subscriptions accounted for 57% of deferred revenue in the latest quarter. The company aims to move roughly half of its customer base to Extreme Platform ONE by the end of fiscal 2027, compared with approximately 10% at the end of fiscal 2026, and expects to largely complete the transition by fiscal 2028.

He said fiscal 2027 will be a transition year, as the bundling of product lines affects the discrete support revenue line. However, he expects SaaS annual recurring revenue to reaccelerate as subscription revenue is recognized from deferred revenue, with an inflection anticipated toward the end of the fiscal year.

The company is also investing in data center offerings supporting speeds of 400 and 800, Kovler said. He expects enterprises to invest more in on-premises compute and AI workloads over time. Extreme aims to use Platform ONE as a common management layer for both campus networks and future data center switches.

Pricing, Supply and Market-Share Opportunity
Kovler said Extreme expects another year of double-digit product revenue growth and believes it can gain share from larger incumbents. He said aging customer equipment, end-of-life products and competitor product-line transitions may create opportunities, particularly in government and regulated markets where contracts can be reopened for bidding.

The company has raised prices twice during the past year, while some competitors have raised prices more frequently, Kovler said. Extreme is guaranteeing pricing for customers that register interest and deals through October and November, a strategy he said is intended to support orderly purchasing and supply-chain planning rather than encourage a short-term buying surge.

He added that the company has secured memory supply and has visibility into its memory pricing for the year. In certain product lines, he said, competitors are facing longer lead times, which Extreme believes can support additional share gains.

Kovler described current backlog as improving but remaining at “very reasonable levels,” rather than reaching the elevated levels seen during the prior supply-chain-driven cycle. He said the company prefers measured demand growth and is seeking to avoid customers placing orders far in advance of actual delivery needs.

About Extreme Networks (NASDAQ:EXTR)Extreme Networks, Inc NASDAQ: EXTR is a global provider of end-to-end networking solutions designed to support enterprise, data center, and service provider environments. The company's product portfolio encompasses high-performance wired and wireless access switches, routers, network security appliances, and software-defined networking (SDN) tools. Driven by a cloud-native management architecture, Extreme's Intelligent Edge Platform integrates network analytics, automation and orchestration capabilities to help organizations optimize performance, reduce operational complexity and strengthen security.

Since its founding in the mid-1990s and subsequent public listing in 1999, Extreme Networks has expanded its technology footprint through targeted acquisitions.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Should You Invest $1,000 in Extreme Networks Right Now?Before you consider Extreme Networks, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Extreme Networks wasn't on the list.

While Extreme Networks currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

The space race is growing fast, and you don’t have to have gotten in early on SpaceX to profit. This report shows seven space stocks you can buy today that may grow as rockets, satellites, defense, space internet, and new space technology become more important.

Get This Free Report

Cautious IT spending amid heightened uncertainty over global macroeconomic conditions and volatile supply-chain dynamics due to tariff troubles continues to be concerning for the participants in the Zacks Computer - Networking industry in the near term. Fierce competition is an overhang on pricing power and margin expansion.

However, over the long term, the participants are expected to benefit from the networking infrastructure upgrade driven by AI workloads, cloud computing, big data, network security and next-generation connectivity.

The proliferation of AI workloads and hyperscale data centers is accelerating investments in high-speed interconnects, optical networking and Ethernet switches. Players in this space are focused on capitalizing on the multi-billion-dollar AI infrastructure opportunity. The rapid deployment of 5G is fueling the proliferation of the Internet of Things (IoT), Advanced Driver Assistance Systems, Augmented Reality/Virtual Reality (AR/VR) devices and 5G smartphones, driving demand for robust networking infrastructure. The Wi-Fi 7 upgrade cycle will act as a catalyst.

Also, the explosion of AI workloads requires a major upgrade to observability infrastructure. There is a greater need for continuous monitoring of hybrid environments and tighter security amid rising attacks. This will spur demand for innovative networking products, favoring prospects for prominent industry players such as Cisco Systems (CSCO - Free Report) , Extreme Networks (EXTR - Free Report) and Digi International (DGII - Free Report) .

Industry Description The Zacks Computer-Networking industry comprises companies that offer networking and Internet-connected products, including wireless (Wi-Fi and Long-Term Evolution or LTE), Ethernet and powerline, focusing on dependability and ease of use. The products are available in numerous configurations to cater to the changing requirements of consumers in each geographic territory where it operates. Some industry players also provide mission-critical IoT solutions and network security services to help clients build next-generation connected products, and implement and manage critical communications infrastructures in demanding environments with enhanced safety levels. Focus on developing IoT sensors, drones and wearables amid increasing demand for cloud computing-based contact tracing applications is driving the industry.

4 Trends Influencing the Industry's Future Technological Advancement Opening Business Avenues: The proliferation of AI and high adoption of cloud and data-intensive applications is driving higher traffic and creating a need for advanced optical networking, high-speed interconnects, Ethernet switches, routing and wireless infrastructure. Expansion of industrial IoT and edge computing, and the increasing popularity of smart connected devices are further creating growth opportunities. Rising cybersecurity concerns are emerging as a key tailwind, driving demand for solutions such as threat detection, network monitoring and zero-trust security architectures.

Rapid Deployment of 5G to Boost Growth Prospects: The success of the 5G technology hinges on substantial investments to upgrade infrastructure in the core fiber backhaul network to support growth in data services. Efforts to develop smart connected homes, hospitals, factories, buildings, cities and self-driving vehicles bode well for industry players. These firms invest heavily in LTE, broadband and fiber to provide additional capacity and improve Internet and wireless networks. These initiatives hold promise.

Wi-Fi 7 Upgrade Cycle to Drive Momentum: Brisk technological advancement, dynamic products, high-speed connectivity, low latency and evolving industry standards define the networking industry. The growing clout of the latest Wi-Fi 6E-compliant residential gateways, Wi-Fi routers, set-top boxes and wireless range extenders is a testament to the same. The increasing demand for connecting more devices to the network has been driving demand for Wi-Fi 6E devices. Wi-Fi 6E addresses Wi-Fi spectrum shortage issues by providing continuous channel bandwidth to support a higher number of connected devices without compromising speed. The rollout of Wi-Fi 7 bodes well for the companies in this space.

Macroeconomic Turmoil Is Concerning: Global macroeconomic weakness and volatile supply-chain dynamics are persistent concerns. Tariff troubles, especially between the United States and China, remain an overhang on global supply chains. Inflation could affect spending across small and medium-sized businesses globally and uncertainty in business visibility could dent the industry’s near-term performance.

The computer networking industry remains highly competitive, with a large number of established and new players vying for market share. As growth stabilizes, competition often intensifies, leading to pricing pressure and margin compression.

Zacks Industry Rank Indicates Bleak Near-Term Prospects The Zacks Computer-Networking Industry is housed within the broader Zacks Computer and Technology sector. The industry carries a Zacks Industry Rank #167, positioning it in the bottom 32% of more than 247 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

Before we present a few stocks you may want to consider for your portfolio, considering bright prospects, let us look at the industry’s recent stock-market performance and valuation picture.

Industry Outperforms the S&P 500 and the Sector The Zacks Computer-Networking industry has outperformed the S&P 500 composite and the broader Zacks Computer and Technology sector in the past year.

The industry has gained 67.4% over this period, compared with the broader sector’s 24.3% rally. The S&P 500 has appreciated 18.4% over the same time frame.

One-Year Price Performance

Industry's Current Valuation Based on the forward 12-month price-to-earnings (P/E) ratio, a common multiple for valuing Computer-Networking stocks, the industry is currently trading at 28.78X, compared with the S&P 500’s 20.11X. It is also higher than the sector’s forward-12-month P/E of 20.64X.

In the past five years, the industry traded as high as 31.47X and as low as 12.45X, with the median being 17.27X, as the charts below show.

Forward 12-Month P/E Ratio

3 Computer-Networking Stocks to Add to Portfolio Cisco Systems: Headquartered in San Jose, CA, the company offers identity and access, advanced threat and unified threat management solutions.

Cisco is benefiting from the demand for AI Infrastructure solutions, with hyperscaler demand acting as a key catalyst. The company expects its networking portfolio, led by Silicon One, AI native security solutions and operating systems, to support top-line expansion moving forward. The company expects AI hyperscale revenues to ramp considerably, and expects at least $6 billion in AI-related revenues for fiscal 2027.

In the third quarter of fiscal 2026, AI infrastructure orders from hyperscalers came in at $1.9 billion, taking year-to-date total to $5.3 billion. The company also raised expected hyperscaler AI orders to $9 billion and expected AI infrastructure revenues from hyperscalers to about $4 billion for fiscal 2026.

Within its core Networking segment, Cisco is witnessing robust traction across the enterprise data center switching business, as customers prepare their infrastructure for agentic applications and AI inferencing.

Acacia business is also witnessing strong growth as hyperscalers deploy both 400G and 800G coherent optics, with 800G pluggables gaining significant traction.

CSCO returned $2.9 billion to its shareholders through repurchases and dividends in the last reported quarter. The Zacks Consensus Estimate for fiscal 2026 bottom line is pinned at $4.28, unchanged in the past 30 days. Shares have gained 68.6% in the past year.

At present, CSCO carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Price & Consensus: CSCO

Extreme Networks: Based in Morrisville, NC, the company provides AI-driven cloud networking solutions. Strong demand for the company’s networking solutions bodes well. EXTR expects revenues to be $1.275 billion to $1.28 billion for fiscal 2026.Extreme’s launch of Platform ONE and pivot to a recurring model is supporting growth amid solid enterprise networking demand. In the fiscal third quarter, revenue growth was11% year over year while product revenues were up 12% from the prior-year quarter.

Momentum in subscription bookings is expected to grow with the adoption of Platform ONE and drive up SaaS annual recurring revenues (“ARR”). In the fiscal third quarter, SaaS ARR rose 29% year over year to $236 million. Extreme closed 44 deals, each worth more than $1 million, signaling stronger deal quality and strategic growth.

EXTR also launched Extreme Agent ONE, a new set of AI agents designed for enterprise networking in May 2026.

Wi-Fi 7 is emerging as a key catalyst, driving network refresh cycles. It recently unveiled Extreme Multi-Beam Wireless, a next-generation stadium Wi-Fi connectivity solution. This solution is designed for high-density environments and supports higher bandwidth.

However, the company continues to face component pricing pressure as well as supply chain issues. To tackle these, EXTR has secured its supply chain through fiscal 2027, improving fulfillment certainty and margin visibility.

At present, EXTR carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $1.04, unchanged in the past 30 days. Shares are up 67.2% in the past year.

Price & Consensus: EXTR

Digi International: Based in Hopkins, MN, Digi is a well-known provider of business and mission-critical Internet of Things (IoT) products and services globally. The company’s industrial Internet of Things offerings encompass embedded, edge and turnkey vertical solutions. These solutions find applications across emerging technology trends such as AI, edge computing and industrial automation. Digi is embedding AI across its portfolio. Digi’s outlook remains supported by sustained ARR growth, ongoing benefits from acquisitions and the long-term opportunity to integrate AI into industrial IoT solutions. The company expects ARR to grow 25% in fiscal 2026, reaching around $190 million by the end of the year.

To capitalize on the AI opportunity, DGII recently unveiled DANI, the Digi Artificial Network Intelligence agent. DANI is an AI network operations agent that is embedded in Digi Remote Manager, a networking device management platform, enabling network operators/managed service providers to monitor network issues, identify causes, and offer recommended actions through a unified conversational interface.

Digi continues to pursue strategic acquisitions, which are likely to supplement organic growth.

Management highlighted challenges in the supply chain, including higher memory pricing and energy-driven freight costs, which continue to create cost volatility.

At present, DGII carries a Zacks Rank #3. The Zacks Consensus Estimate for fiscal 2026 bottom line is pegged at $2.48, unchanged in the past 30 days. Shares have gained 101.3% in the past year.

Price & Consensus: DGII