Corning (NYSE:GLW) A $6B Meta Deal and a New AI Demand Curve

From iPhone Glass to AI Infrastructure, The Story Has Changed

Many investors are starting to take notice of Corning, a 175 year old US company that the market used to think of as a “boring” business.

The stock has pushed to new all time highs, marking a major turnaround for a company best known for the behind the scenes essentials. Corning makes fibre optic cable, and it also produces the specialty glass used in products like the iPhone screen.

What’s changing is the demand backdrop. Corning is leaning into the AI driven data centre build out, and we are now seeing revenue and profits rebound as the company ramps up fibre optic supply for data centres.

With the revenue expansion supported by a $6 billion deal with Meta, Corning is also focused on scaling its manufacturing footprint and operational capacity.

The result is that this classic picks and shovels business is starting to look structurally different. Optical Communications has grown into a much bigger piece of the story, now representing 38% of core sales.

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The Internet’s Backbone Is Back in Favour

At its core, Corning’s Optical Communications business is about the infrastructure that keeps the internet running. This includes the fibre optic cables that run under the ocean and connect countries and continents, which is an essential and highly profitable part of the global communications backbone.

It is also worth highlighting why fibre matters. Traditional cables, like older phone lines, are made from copper and transmit electrical signals. Fibre optic cables, like Corning’s, are made from glass and transmit photons through lasers as pulses of light. The result is dramatically higher data throughput and, in many cases, around 5x to 20x lower power usage for the same connectivity task.

When you look at the latest financials, you can see why the market is starting to re rate the story. The company has seen multiple expansion alongside increasingly positive earnings momentum this year.

Revenue totalled $16.4 billion, up 13%. Optical Communications was the standout, growing 35% to $6.27 billion. Management is pointing to “new demand pockets”, particularly enterprise and Gen AI related connectivity, alongside a cyclical recovery that is now clearly turning supportive.

Revenue Up 13%, Optical Up 35%, What the Market Is Seeing

Gross margins remained stable at 38%. The bigger story, though, is profitability further down the P&L.

Core operating margin came in at 20.2% in Q4, and reached 19% for the full year, up from 17.5% the prior year. Full year EPS grew 29%, which tells you earnings are compounding faster than sales. That’s largely because operating margins are expanding as scale builds, and Corning continues to lift capacity in its Optical Communications segment.

The Investors Takeaway for GLW

After such an extraordinary run in the share price, we frame this as a hold and keep it on the watchlist for now. As research coverage and news flow increase, more investors are buying into the story, but the valuation is starting to look stretched.

At around a 48x P/E, Corning is trading at more than double the sector median, so from here the upside case likely needs continued execution and strong follow through on the optical demand cycle.