A US glass manufacturer has suddenly surfaced into hidden AI stocks! Stock prices soared 12% due to strong sales of optical fiber for AI servers! Towards an upward revision of earnings
A glass manufacturer with 170 years of history, $Corning(GLW.US$ButSudden rise as a hidden AI stock. Corning announced on 7/8Strong performance of new optical connectivity products for generative AICore sales (provisional value) for the April-6 fiscal year due toStock prices surged 12% after an upward correctionI did it.In the AI boom $NVIDIA(NVDA.US$Other than that, they are looking for something other thanmidst、Corning is likely to receive even more attention in the future as a unique AI brand。
(In response to an upward revision of Corning's earnings forecast, the “three electric cable companies” in the Japanese market on 7/9 $Fujikura(5803.JP$Ya $Furukawa Electric(5801.JP$、 $Sumitomo Electric Industries(5802.JP$was bought. Of 6/7”AI data center investment is rapidly accelerating! What are the 3 late stocks? Major US companies have invested 4 trillion yen in Japan! High ROE, popular stocks(See also”.)
Corning is one of the world's largest glass product manufacturers with a 170-year history, beginning with inventor Edison making glass cases for light bulbs. Currently,Expand business with a focus on optical fiber and displaysDoing it. Familiar Corning products include glass for TV screens and smartphones. For example, $Apple(AAPL.US$The iPhone and Samsung Electronics' Galaxy use Corning durable glass.Development of optical fiber products for generative AII'm doing it,Shipments will begin this yearI did it.Recorded in sales for the current fiscal year (fiscal year ending 2024/12)It is expected to be done.
Eight times more fiber than before, small fibers with high technical capabilities are required
According to Corning, there is a tendency for 2 H100 servers (servers equipped with the NVIDIA AI semiconductor “H100”) to be mounted on one back-end network GPU rack. In order to support (connect) it, 256 or more fibers are required for the same rack, and the number of fibers per rack is increased by about 8 times that of the past. Since it is necessary to fit even more things in the same space, technical ability is also questioned. It is said that this led Corning to invent the world's first smaller optical fiber, an order of magnitude smaller connectors. It is said that the number of fibers, which is 8 times that of the conventional one, has brought big business opportunities to Corning in terms of quantity.
Short term: recovering from the bottom of 1Q
At the financial results briefing on 4/30, the management team1Q (fiscal year ending January-March) was the quarter with the lowest sales this fiscal yearIt becomes,Improvements after 2QIt was decided to anticipate it. In the short term, optics and displays are expected to be the biggest drivers of performance improvement. In optical communication, carrier inventory has begun to return to a more normal level, and it is expected that Corning's backlog of orders will increase as customers resume purchases to support adoption rates. It is said that is exactly what is happening right now. In the display field, panel manufacturers raised occupancy rates in the latter half of the 1st quarter, and since retail demand is expected to grow due to promotions in the mid-term, it is expected that the occupancy rate will continue to rise in the 2nd quarter.
The 2Q earnings forecast was revised upward
Is Corning scheduled to be announced on 7/8 and 7/30Earnings forecasts for the 2nd quarter (fiscal year ending April-6) were revised upwardI did it. Specifically, core sales were raised from the previous forecast of about 3.4 billion dollars to about 3.6 billion dollars, and core EPS was raised from 0.42 to 0.46 dollars to the upper limit of the range, or a level slightly above it.Strong adoption of new optical connectivity products, mainly for generative AI, is driving resultsExplain that it's done.
Is Corning scheduled to be announced on 7/8 and 7/30Earnings forecasts for the 2nd quarter (fiscal year ending April-6) were revised upwardI did it. Specifically, core sales were raised from the previous forecast of about 3.4 billion dollars to about 3.6 billion dollars, and core EPS was raised from 0.42 to 0.46 dollars to the upper limit of the range, or a level slightly above it.Strong adoption of new optical connectivity products, mainly for generative AI, is driving resultsExplain that it's done.
Medium to long term: sales growth of 3 billion dollars per year is expected by 2027
Regarding the medium- to long-term outlook, the management teamAnnual sales are expected to increase by more than $3 billion over the next 3 yearsThat's it. He explained that it is due to the company's leading position in the optical communication industry, attractive business opportunities brought about by generative AI, and construction of new product platforms (for example, automotive glass solutions that support advanced autonomous driving systems). Regarding products for generative AI, it was emphasized that the ability to provide end-to-end solutions by integrating innovations spanning optical fibers, cables, and connectors is a unique competitive advantage. It is assumed that important customer acquisitions are being accumulated for future AI data center construction, and it is expected that the sales acquisition rate will be maintained over the long term.
Regarding the medium- to long-term outlook, the management teamAnnual sales are expected to increase by more than $3 billion over the next 3 yearsThat's it. He explained that it is due to the company's leading position in the optical communication industry, attractive business opportunities brought about by generative AI, and construction of new product platforms (for example, automotive glass solutions that support advanced autonomous driving systems). Regarding products for generative AI, it was emphasized that the ability to provide end-to-end solutions by integrating innovations spanning optical fibers, cables, and connectors is a unique competitive advantage. It is assumed that important customer acquisitions are being accumulated for future AI data center construction, and it is expected that the sales acquisition rate will be maintained over the long term.
After the company raised its 2Q earnings forecast on 7/8, several analysts raised target stock prices. However, not all analysts in charge responded right away, and it seems that some analysts also want to confirm the details of the financial results announcement scheduled for 7/30. However, since it is not a notable brand like NVIDIA, it is also expected that analysts' reactions and evaluations may be delayed. Note that compared to the average target stock price as of 7/9, there is already no room for increase in stock prices. However,Compared to a bullish target stock price ($50) reflecting an increase in earnings forecastsWell then,Suggests room for growth of 16%Doing it.
Created 7/9/24 Market Analyst Amelia
Source: Company materials and created by MooMoo Securities from Bloomberg
Source: Company materials and created by MooMoo Securities from Bloomberg
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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