Corning's generative AI product sales more than doubled in the fiscal third quarter, while management reiterated its goal of reaching a $40 billion annualized sales run rate by 2030.
- Corning's Optical Communications business recorded a 44% year-over-year increase in sales to $2.38 billion.
- The company forecast fourth-quarter core EPS of $0.96 to $1.00, above the Street's $0.93 estimate, alongside core sales of $5.2 billion to $5.3 billion.
- Corning has "steadily added capacity, backed by long-term customer agreements that share the cost and risk of expansions,” said CFO Ed Schlesinger.
Corning Inc. (GLW) shares were in focus on Tuesday after the company reported better-than-expected third-quarter earnings and sales, driven by strong demand for artificial intelligence infrastructure, and issued a fourth-quarter profit outlook above the Street forecasts.
Corning reported third-quarter (Q3) core earnings per share (EPS) of $0.91, beating the $0.88 analyst consensus. Core sales rose 19% year over year to $5.08 billion, ahead of Koyfin's adjusted sales estimate of $5.03 billion.
Corning’s core operating margin expanded 310 basis points to 22.7%, while adjusted free cash flow reached $661 million. At the time of this writing, GLW stock was up more than 2% and among the top-trending tickers on Stocktwits.
AI Demand Powers Growth For Corning
Corning's Optical Communications business recorded a 44% year-over-year increase in sales to $2.38 billion, supported by 84% growth in Enterprise Networks. Generative AI product sales more than doubled year over year.
The company's solar business also recorded 37% sales growth, although production ramped up more slowly than anticipated. Corning has "steadily added capacity, backed by long-term customer agreements that share the cost and risk of expansions,” said Executive Vice President and Chief Financial Officer (CFO) Ed Schlesinger.
Corning Secures Four Multibillion-Dollar Deals
Corning secured four long-term, multibillion-dollar customer agreements during the quarter, including deals with Verizon (VZ) and AT&T (T).
Speaking on CNBC's Squawk Box Tuesday, CEO Wendell P. Weeks said the agreements involve sharing technology development plans and roadmaps with customers, as well as sharing the risks and rewards of helping them achieve their goals.
Asked about the possibility of another telecom bubble similar to the early 2000s, Weeks explained that Corning often asks customers for upfront cash to help fund manufacturing capacity expansions.
He said Corning returns that cash through the profit stream generated when it delivers products to customers, adding that the company is deliberately maintaining a conservative financial profile.
Weeks On AI Demand And Financing Risks
Discussing financing risks across the AI industry, Weeks told CNBC that the majority of Corning's revenue is directed toward major hyperscalers, which he said have strong balance sheets and are increasing capital investments.
"I have very little exposure at this moment to the neo clouds," he said. Weeks also said, "I'm quite bullish on AI demand over the long term," while acknowledging that there will be volatility.
Corning Targets $40B Annualized Sales Run Rate By 2030
Corning expects fourth-quarter core EPS of $0.96 to $1.00, representing approximately 36% year-over-year growth. Core sales are projected at $5.2 billion to $5.3 billion, compared with the $5.21 billion consensus.
Under its internal Springboard plan, Corning is targeting annualized sales run rates of $20 billion by the end of 2026, $30 billion by 2028 and $40 billion by 2030.
Weeks reiterated on CNBC that the company expects EPS to grow faster than sales while improving its free cash flow and financial profile.
What Retail Thinks About GLW Stock
On Stocktwits, retail investors’ sentiment around GLW stock improved to ‘neutral’ from ‘bearish’ a day ago.
So far this year, GLW shares have surged nearly 41%. By comparison, the Vanguard Morningstar Growth ETF (VUG), which holds the stock, has risen over 8% during this period.
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