Dell’Oro Group Forecasts Optical Transport Equipment Market to Grow 16% in 2026
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Dell’Oro Group forecasts 16% growth for the optical transport equipment market in 2026, projecting manufacturer revenue above $18 billion for the first time since 2000, citing demand for network infrastructure from data centers.
The report links 1Q 2026 momentum to data center interconnect spending while warning that stretched lead times and supplier order backlogs may constrain how high growth can run in 2026.
Market outlook for 2026
Dell’Oro Group forecasts the optical transport equipment market will grow 16% in 2026, surpassing $18 billion in manufacturer revenue for the first time since the year 2000.
It attributes the forecast to rising demand for network infrastructure from data centers.
Update to the 2026 forecast
Dell’Oro Group said it raised its full-year 2026 forecast from 10% to 16% after results in the first quarter.
“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.
Drivers and supply constraints
Dell’Oro Group estimated the optical transport market grew 20% year-over-year in 1Q 2026, supported by demand for data center interconnect.
“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,” said Yu.
Lead times and supplier backlogs
Dell’Oro Group reported that multiple optical suppliers are noting growing backlogs while lead times continue to stretch out.
“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.
1Q 2026 report highlights
Dell’Oro Group said market growth in 1Q 2026 came from double-digit revenue increases in both WDM systems and IPoDWDM ZR/ZR+ optical pluggable modules.
“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,” according to the 1Q 2026 Optical Transport Quarterly Report.
Regional performance and revenue sources
Dell’Oro Group reported that revenue tied to direct purchases for data center interconnect grew an estimated 40% year-over-year.
“Revenue associated with direct purchases for data center interconnect (DCI) grew an estimated 40 percent year-over-year,” said the report.
Regions and vendor share
Dell’Oro Group said North America, Europe, and the Middle East Africa regions grew year-over-year, while Asia Pacific and Latin America declined.
It also reported that the top optical transport systems vendors with over 80% combined revenue share were Huawei, Ciena, Nokia, and ZTE on a trailing four-quarter basis.
For IPoDWDM ZR/ZR+, the lead vendors listed were Marvell and Cisco Acacia.
Scope of the quarterly report
Dell’Oro Group described the Optical Transport Quarterly Report as covering manufacturers’ revenue, average selling prices, and unit shipments by speed up to 1.6 Tbps.
The report tracks multiple optical transport categories including DWDM long haul, WDM metro, multiservice multiplexers (SONET/SDH), and data center interconnect.
It also covers disaggregated WDM systems and IPoDWDM ZR/ZR+ optics.
This Analyst Signals brief reflects a neutral, fact-based summary of the original research note.
Blog post, originally published at delloro.com.