Forget the Big Chipmakers for a Minute: This Overlooked AI Stock Is Up 114% and Just Landed Deals With Nvidia and Amazon
Written by Daniel Sparks for The Motley Fool -> The company's optical communications sales grew 36% year over year in the first quarter. Amazon and Nvidia have each struck multibillion-dollar fiber agreements with the company. The stock has more than doubled this year. On Mon
The company's optical communications sales grew 36% year over year in the first quarter.
Amazon and Nvidia have each struck multibillion-dollar fiber agreements with the company.
On Monday, Amazon (NASDAQ: AMZN) handed an old-line glassmaker one of its biggest endorsements yet in the AI build-out. The cloud and e-commerce giant announced a multiyear, multibillion-dollar agreement to buy the optical fiber and connectivity that will wire its expanding U.S. data centers from Corning (NYSE: GLW) -- a deal expected to create 1,000 manufacturing jobs at the company's North Carolina plants. Shares of the 175-year-old glassmaker jumped as much as 10% on the news.
Lately, that kind of headline has become routine, even as most of the AI spotlight stays on the chipmakers. Corning was founded in 1851 and has made the glass for everything from Thomas Edison's early lightbulbs to the iPhone. Now its fiber -- the strands that shuttle data between the thousands of chips inside an AI data center -- has turned it into one of the quieter beneficiaries of the spending wave. And the stock has more than doubled this year, rising 114%.
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So, is there still a case for the shares after a run like that?
The Amazon agreement isn't a one-off. In January, Meta Platforms agreed to buy up to $6 billion of optical solutions from Corning over several years for its own AI data centers. Then, in May, Nvidia named Corning its optical partner for next-generation AI infrastructure -- a multiyear deal under which Corning will expand its U.S. optical connectivity capacity tenfold and build three new plants in North Carolina and Texas. Nvidia is putting $500 million behind the partnership and holds warrants that could lift its total investment to as much as $3.2 billion.
Moving data inside an AI data center over glass rather than copper is faster and uses less power, and the number of connections required keeps climbing as these clusters grow. And Corning's newest product, Multicore Fiber, packs four light-carrying cores into one strand -- four times the density of a standard single-core line -- which the company says lets data center operators get the same capacity with up to 75% fewer connectors.
