Cumello Joseph sold $569K of CIEN

Cisco Systems (CSCO) fell 7% after Morgan Stanley downgraded it to Equal-weight, citing AI-driven margin pressure and a strong recent rally. The firm lowered its price target to $120 from $135. Ciena (CIEN) and Arista Networks (ANET) also dropped, 15% and 10% respectively, due to concerns about AI infrastructure spending. Cisco's diversified business model has cushioned its decline compared to its peers.

NVIDIA's stock fell 9% as post-midterm fears of slower US data-center growth and stricter AI rules deepened the chip sector selloff. Analysts expect NVIDIA's EPS to more than double by fiscal 2029, despite its forward P/E being at a five-year low. The company's November 17 earnings report will test US demand. Other affected companies include Everpure, Applied Digital, and Ciena.

Lumentum (LITE) dropped 15% as Marvell (MRVL), which is acquiring it, fell due to an AI chip selloff. The deal, set to close in 2028, values Lumentum at 4.5 Marvell shares per Lumentum share, with no price protection. Other optical stocks like Ciena (CIEN) and Credo (CRDO) also declined. Lumentum's CEO stated its parts are sold out through early 2029, with analysts predicting significant EPS growth.

Coherent (COHR) fell 16% despite a revenue beat, raised outlook, and a $20B optics deal. Revenue rose 50% to $2.37B, EPS up 80% to $2.09. Analysts expect 68% EPS growth by fiscal 2027. Ciena (CIEN) and Credo (CRDO) also dropped amid AI stock selloff tied to Democrats' midterm wins. Operating cash flow turned negative.

Marvell (MRVL) acquiring Lumentum (LITE) may prompt Ciena (CIEN) and Cisco (CSCO) to diversify suppliers, according to BofA analysts. The deal, expected to close in 2028, could impact optical component supply. Ciena and Cisco are major customers of Lumentum, with Ciena accounting for 15% of Lumentum's 2026 revenue.

Marvell Technology agreed to buy Lumentum Holdings in an all-stock deal valued at $115B, including debt. Marvell shares fell 12.7% and Lumentum dropped 18.6% on the news. The deal, expected to close by 2028, aims to create an AI connectivity leader, with Marvell shareholders owning about two-thirds of the combined company. Both companies' stocks underperformed the implied deal price, reflecting market doubts about the terms and timing.