The Optical Transport equipment market is forecast to grow 16 percent in 2026, surpassing $18 billion in manufacturer revenue for the first time since the year 2000, due to the rising demand for network infrastructure brought on by AI data centers.
“We raised our full year 2026 forecast from 10 percent to 16 percent 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 percent 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,” added Yu.
Additional highlights from the 1Q 2026 Optical Transport Quarterly Report:
- The market grew 20 percent year-over-year in 1Q 2026 due to double-digit revenue increases in both WDM Systems and IPoDWDM ZR/ZR+ optical pluggable modules.
- Revenue associated with direct purchases for data center interconnect (DCI) grew an estimated 40 percent year-over-year.
- North America, Europe, and the Middle East Africa (MEA) regions grew year-over-year, while Asia Pacific and Latin America declined.
- On a trailing four-quarter basis, the top Optical Transport Systems vendors with over 80 percent combined revenue share were Huawei, Ciena, Nokia, and ZTE. For IPoDWDM ZR/ZR+, the lead vendors were Marvell and Cisco Acacia.
