According to the Futu Securities News App, Corning (GLW.US), the global leader in material science, raised its second-quarter performance expectations on Monday, Eastern Time, and its stock price rose by nearly 12% at the close of U.S. stocks, marking the best trading day surge since March 2020. The company is known worldwide for its proprietary Gorilla Glass used for Apple iPhone series and other flagship smartphones. However, the company recently attributed its outstanding performance to the global trend of laying out AI by enterprises, and the unbeatable demand from enterprises for its optical connections and optoelectronic communication products that provide the core power for high-performance network systems that run similar ChatGPT generative AI tools.

Compared with popular chip giants such as Nvidia (NVDA.US), Micron Technology (MU.US), and Broadcom (AVGO.US), Corning is one of the "low-key big winners" that directly benefits from the unprecedented global AI frenzy, and enterprises and major data centers have extremely strong demands for its optical communication products. On Monday, the stock price of the company rose by nearly 12% in a single day, reaching a new high since the era of the Internet bubble. The stock price has risen by as much as 45% since the beginning of this year. The strong demand for fiber optics and other AI-related hardware devices in the market has provided Corning with more business growth opportunities and promoted Corning's outstanding performance in stock price.

According to the latest media interview, Wendell Weeks, CEO of Corning, said: "We have developed new fibers, cables, optical connectors, and customized integrated optical solutions that significantly reduce network installation costs, overall time and space, and carbon footprint."

Corning forecasts in a latest press release that its total second-quarter sales will be around $3.6 billion, higher than the previously expected $3.4 billion. The company also expects earnings per share to be "at or slightly above" the previously announced outlook range of $0.42 to $0.46 per share by its management team.

Weeks stated in the press release that he expects the trend of year-on-year growth to return in the second quarter. "These results strengthen our confidence in Springboard-Corning's plan to increase annual sales by $3 billion or more over the next three years, with a combination of cyclical factors and long-term trends," Weeks added.

The company expects that first-quarter sales will be at their lowest level this year, a year-on-year decline of 6%, which is the lowest performance level this year. Due to the apparent improvement in market conditions, the company expects total sales to increase significantly throughout 2024. Corning plans to release its second-quarter 2024 performance on July 30, 2024, Eastern Time.

Why did Corning, which focused on iPhone glass substrates, turn into one of the biggest winners in the AI frenzy?

Corning Incorporated is a material science company headquartered in Corning, New York, founded in 1851. Corning has extremely deep technical accumulation and innovative history in fields such as glass, ceramics, and optical physics. One of Corning's core sources of sales revenue is the provision of proprietary glass substrates used to manufacture high-resolution and high-performance displays for liquid crystal displays (LCDs) and organic light-emitting diode (OLEDs) displays, which are widely used in TVs, laptops, desktop monitors, tablets, and mobile devices.

Among them, Apple has been one of Corning's largest customers for many years, which is also an important force supporting Corning's revenue growth. Apple widely uses Corning's Gorilla Glass as screen protection glass for its iPhone, iPad, and other flagship consumer electronics products. Due to the huge sales of Apple products in the global consumer electronics market, this long-term partnership between the two sides has an important impact on Corning's total sales revenue and market leadership.

In addition, optoelectronic communication products are also one of Corning's largest business areas. Corning occupies a dominant position in the optical fiber and cable markets, which are widely used in global telecommunications companies and large-scale data centers. Corning produces breakthrough fiber and cable products, as well as related hardware and equipment, such as fiber optic components and connectors, which are widely used in the global telecommunications industry.

With the increasing application of AI and big data, the global demand for high-performance data centers is growing rapidly. These data centers require a large amount of fiber optic and high-speed network connections to support huge data transmission and low-latency communication. Corning's leadership in fiber optic and optical communication hardware makes it one of the most direct beneficiaries of the frenzy of global enterprises pouring huge sums of money into layout AI.

Corning also benefits from the increasing demand for high-performance materials in AI hardware equipment (such as GPUs and dedicated AI accelerators) on the AI infrastructure side. The glass, ceramics, and optical products produced by Corning's specialty materials department play an important role in these high-performance hardware, such as cooling modules for GPUs and precision optical components.

According to IDC's well-known research report, the total investment in AI (artificial intelligence) IT software, hardware, and other related services covering the system centered on artificial intelligence in the world in 2022 is only about 132.49 billion US dollars. However, it is expected to increase to 512.42 billion US dollars in 2027, with a compound annual growth rate (CAGR) as high as 31.1%, and will fully focus on the generative AI field such as ChatGPT. IDC's latest survey shows that by 2027, 45% of companies are expected to master and use generative AI tools to jointly develop digital products and services, so as to strive to double their revenue scale compared to their competitors.