Raymond James sees Charter capex benefiting Harmonic, AAOI shares By Investing.com

Charter reported Q1 2026 cable capex of $2.86B, above Raymond James' $2.68B estimate and the Street's $2.64B, while reaffirming 2026 capex guidance at $11.4B and signaling a decline to roughly $7.5B-$8.0B by 2028. For equipment vendors, the spending backdrop is mixed: near-term outperformance supports the group, but the company still expects meaningful capex compression after 2026. Harmonic remains a relative bright spot, with five analysts recently raising earnings estimates and consensus implying about 25% upside.

Analysis

The key read-through is not just that cable capex is holding up, but that spend is becoming more selective and less secularly generous. That favors vendors with exposure to incremental broadband capacity and automation, while penalizing names dependent on broad-based network refresh cycles or legacy video budgets. In practice, the market is likely underestimating how quickly the vendor mix can rotate toward the few suppliers that sit closest to DOCSIS upgrades, node splits, and software-driven efficiency gains.

The biggest second-order effect is that a flatter capex path into 2027-2028 does not mean an immediate revenue cliff; it means a lumpy procurement environment where order visibility can actually improve for the best-positioned vendor, then deteriorate abruptly once operators digest their near-term build plans. HLIT looks best insulated because the business is increasingly concentrated in broadband, and the spin-away of video reduces earnings noise exactly as the market is looking for cleaner exposure to operator spend. By contrast, AAOI and NOK remain more vulnerable to spending discipline and competitive pricing, because any slowdown in infrastructure budgets tends to compress lower-quality revenue streams first.

The contrarian angle is that consensus may be too focused on the headline capex guide and not enough on the composition shift. If operators are still prioritizing capacity-intensive upgrades even while lowering long-run capital intensity, then software, virtualization, and bandwidth-efficiency vendors can grow faster than the aggregate capex pool implies. But this also creates a timing risk: once the current upgrade wave is finished, equipment orders can gap down for several quarters, so chasing the move after earnings revisions may be late unless the market is willing to pay for visibility rather than growth.

Near-term, the cleanest catalyst is analyst estimate follow-through for HLIT and possibly CIEN if investors broaden the trade beyond the obvious winner. The key reversal risk is that broadband customer losses keep pressuring operators to defer spend, which would hit the whole group over the next 2-3 quarters. Longer term, if charter-like capital intensity trends toward the low teens, the winners will be the vendors with the highest software attach rate and the least dependence on greenfield network expansion.

Key Decisions for Investors

• Long HLIT over the next 1-3 months on pullbacks; risk/reward is attractive because earnings revisions are still catching up, but the main risk is a post-rally reset once the market prices the 2026 capex guide.
• Pair trade: long CIEN / short AAOI for 3-6 months; CIEN should benefit from network optimization and higher-quality carrier spend, while AAOI is more exposed to any capex normalization and pricing pressure.
• Avoid chasing NOK on this tape; if the market starts to discount lower long-run cable capex intensity, NOK’s upside should lag the more bandwidth-focused names and the downside is better asymmetry on any guidance disappointment.
• If HLIT continues to rerate, consider selling out-of-the-money calls against a long equity position for the next earnings cycle; implied upside exists, but the post-guidance multiple expansion may be faster than the operating inflection.
• Watch for a 2-quarter lag in operator order trends: if broadband net adds remain weak into the next reporting season, rotate out of the whole equipment basket and into software/efficiency beneficiaries elsewhere in telecom.