The global optical transport market returned to growth mode in 2025, climbing 10% year over year to reach $16 billion, according to new data from Dell'Oro Group.

Topping the vendor rankings by revenue share were Huawei, Ciena, Nokia, ZTE, and Cisco, highlighting the continued dominance of established systems players in a market increasingly shaped by cloud-scale demand. In the fast-growing data center interconnect (DCI) segment, the leaderboard narrowed to Ciena, Nokia, and Cisco, with revenue heavily concentrated in North America.

The market’s recovery was fueled largely by hyperscale cloud providers investing aggressively in DCI infrastructure to support AI-driven workloads and expanding data center footprints. According to Dell’Oro Group, revenue from direct purchases of wavelength division multiplexing (WDM) equipment for DCI jumped nearly 40% in 2025, while direct cloud provider purchases overall rose about 50%.

“Sales of optical equipment for DCI spiked in 2025 due to huge demand from cloud providers,” Dell’Oro Group VP Jimmy Yu noted in a statement, adding that hyperscalers continued to account for the bulk of purchases, but emerging “neocloud” providers are increasingly entering the market and driving incremental demand.

AI scale-out reshapes DCI

As hyperscalers build out AI training and inference capacity, they require higher-capacity optical interconnects – including WDM transponders, optical line systems (OLS), and pluggable ZR/ZR+ coherent optics – to link campuses and metro regions.

Dell’Oro Group said both traditional optical transport systems and IPoDWDM ZR/ZR+ optics contributed to gains in 2025. The disaggregated WDM segment, in particular, outperformed expectations, growing approximately 40% during the year. Demand spanned transponder units, OLS platforms, and pluggable coherent modules, signaling continued momentum toward open, modular optical architectures.

Looking ahead, Dell’Oro Group expects the broader optical transport market to grow another 10% in 2026, with DCI expanding at a significantly faster rate.

Yu said one notable shift is coming: cloud providers are moving toward “scale-across” DCI architectures to expand AI data centers. Rather than simply linking facilities, operators are building dense, high-capacity interconnect fabrics to support distributed GPU clusters and AI workloads that require low-latency, high-bandwidth connectivity across metro and regional footprints.