Corning (GLW 1.09%) has manufactured the glass for Apple's iPhone since 2007, but it's grabbing investors' attention for a different reason right now. The company supplies some of the best fiber optic cables for data centers for connecting the advanced chips used in artificial intelligence (AI) development.
Demand is soaring at the moment, propelling Corning stock to a whopping 75% gain in 2025 so far. It's crushing some of the biggest hardware suppliers in the AI industry including Nvidia, Advanced Micro Devices, and Broadcom, which have returned between 34% and 42% this year.
Corning stock is still trading at an attractive valuation relative to its peers, which could pave the way for even more upside.
Image source: Getty Images.
Corning has an astronomical opportunity in the data center
AI training and AI inference workloads require an extremely complex hardware stack, which includes graphics processing units (GPUs), central processing units (CPUs), high-bandwidth memory, and data storage chips. High volumes of data constantly travel between those components, and the faster it moves, the more efficient the hardware stack becomes from both a performance and cost perspective.
Fiber optic cables are the superior choice to traditional copper cables because they can transmit significantly more information over far longer distances, and at much faster speeds while ensuring minimal data loss. Corning's Contour Flow cables are specifically designed for AI data centers, packing twice as much fiber into the same cable diameter as its legacy Ribbon cables, which used to be the industry benchmark.
The opportunity in this space is enormous. Just one of Nvidia's Blackwell NV-Link nodes includes up to 72 of the company's GB300 GPUs, and this setup currently uses around two miles worth of copper cabling, which Corning says will eventually be replaced with fiber optics.
Some of the most powerful AI data centers use over 100,000 GPUs, which could translate to almost 2,800 miles of cabling. Those numbers will only grow from here -- for example, Elon Musk's xAI recently built a data center called Colossus that already uses over 200,000 GPUs, which the company plans to scale to one million.
Corning's optical communications revenue is soaring
Corning generated $4.04 billion in revenue during the second quarter of 2025 (ended June 30), which was up 12% year over year, and comfortably above management's guidance of $3.85 billion.
However, the real growth story lies beneath the surface of the headline number. Corning's optical communications segment generated $1.56 billion in revenue during the quarter, which represented a 41% increase from the year-ago period. Enterprise optical communication sales, specifically, surged by a whopping 81% thanks to strong AI-related demand.
The optical communications segment also delivered $247 million in net income (profit), which was up 73% from the year-ago period. Simply put, sky-high demand is giving Corning the freedom to charge higher prices, which is doing wonders for its profit margins. The $247 million in net income accounted for almost half of the company's total net income of $523 million for the quarter, highlighting how important AI has become to the business overall.
NYSE: GLW
Key Data Points
Corning stock might still have room to run
Corning generated earnings of $2.25 per share over the last four quarters, on a non-generally accepted accounting principles (non-GAAP) basis. Its stock is trading at $83 as I write this, which places its price-to-earnings (P/E) ratio at 36.9. For some perspective, here are the P/E ratios of the three chip giants I mentioned earlier:
- Nvidia: 52.3
- AMD: 46.8
- Broadcom: 53.5
Nvidia CEO Jensen Huang predicts that AI infrastructure spending will amount to $4 trillion between now and 2030. Those three companies will capture the bulk of that opportunity because they supply the world's best AI chips and networking equipment for data centers, which is why investors are willing to pay a premium to own their shares.
However, that infrastructure buildout could require tens of thousands of miles worth of cabling, and since Corning's fiber optic solutions are among the best that money can buy, the company likely has a very long growth runway from here. As a result, there could still be plenty of room for upside in its stock, despite its recent gains.
