AI infrastructure demand drives growth in optical networking and routing

The networking and routing sectors are experiencing significant growth driven by the expansion of artificial intelligence infrastructure. ADTRAN Holdings Inc. reported second-quarter revenue of $281.1 million, a 6.1% year-over-year increase. While overall profitability declined, the company saw a 22% increase in its Optical Networking Solutions segment. Notably, hyperscaler revenue for ADTRAN nearly doubled, rising 97% compared to the previous year, signaling a shift toward data center operators.

Supporting this trend, a Dell’Oro Group report indicates that high-end routing and aggregation equipment revenue grew 25% year-over-year in the second quarter of 2026. Direct sales to cloud providers surged 94% during the same period as hyperscalers expand data center capacity. The report highlights record revenue levels for core routers and strong growth across edge and enterprise high-end routers, with demand rising across all major global regions.