The market punished Corning shares despite strong second quarter results as disappointing revenue guidance didn’t contradict the narrative that AI infrastructure might be entering an overbuilt stage. Shares are priced to yield 0.8%.
For the quarter core sales, which adjusts for currency movements, grew to $4.74 billion, up 17%, and core EPS of $0.78 increased 30%.
During the quarter, Corning announced a multi-year, multibillion-dollar agreement with Amazon to supply optical fiber, cable, and connectivity solutions. The company also announced an investment from NVIDIA and a long-term partnership to expand its U.S. fiber production capacity by 50% and U.S.-based optical connectivity manufacturing capacity by 10x. These agreements, in addition to previous announcements, share the risks of capacity expansion.
The company outlined in May its Springboard plan to double its sales run rate from $20 billion at the end of 2026 to $40 billion by the end of 2030, outlining a credible case that fiber connections for future GPU sales will grow 1.3x-1.5x faster than GPU units. Risk-sharing agreements with hyperscalers support growing profitability and free cash flow generation as the plan is executed.