Corning stock drops even after earnings beat as AI trade cools

Corning stock earnings gave investors better-than-expected sales and profit, yet the shares dropped sharply Tuesday as CNBC’s Investing Club said the move looked tied to a broader retreat from artificial intelligence-linked stocks. For everyday investors, the split is the key point: the company’s quarter improved, while the market’s appetite for AI infrastructure names weakened.

Corning’s core revenue for the quarter ended June 30 rose 17% from a year earlier to $4.74 billion, above the $4.61 billion consensus estimate tracked by LSEG. Adjusted earnings per share, a profit measure that excludes some items, climbed 30% to 78 cents, also ahead of LSEG’s 76-cent estimate.

The stock fell more than 18% Tuesday and traded near $115 at its low, according to CNBC. CNBC’s Investing Club attributed much of the selloff to investors reducing exposure to stocks connected to AI infrastructure after a strong first-half rally in that group.

Why did Corning stock fall after earnings?

CNBC’s Investing Club said Corning was being grouped with other AI-related stocks during a rotation out of the trade, even though the company’s results beat expectations. It also noted that Corning’s current-quarter sales outlook was slightly below consensus at the midpoint, which may have added pressure.

For the current quarter, Corning management projected core sales growth of about 16%, implying revenue of roughly $4.9 billion to $5 billion. LSEG’s consensus was $4.97 billion, putting the midpoint a bit below Wall Street’s estimate. Management forecast core EPS of 85 cents to 89 cents, with the midpoint above LSEG’s 85-cent estimate.

CNBC’s Investing Club said it maintained a 2 rating on the stock and cut its price target to $180 from $245. The Club said it was staying patient rather than adding to the position while the stock remained volatile. CNBC disclosed that Jim Cramer’s Charitable Trust is long Corning.

What is driving Corning’s growth?

Corning makes specialty glass and fiber optic products. In data centers, fiber optic cables can move information more efficiently than copper wiring, which is why investors have treated Corning as part of the AI infrastructure supply chain.

The strongest parts of the quarter came from optical communications and solar, according to CNBC. Optical communications sales rose 32% year over year, while solar sales rose 90%. CNBC said optical communications is the more important segment for the AI story because it includes data center exposure.

Within optical communications, CNBC reported that enterprise sales grew 65% from a year earlier and AI data center-related sales nearly doubled. Management said demand was strong enough to accelerate orders, according to CNBC’s account of the earnings call.

Corning also pointed to future opportunities in “scale-up” and photonics, according to CNBC. Scale-out refers to connections across a data center, while scale-up refers to connections inside server racks. Photonics means using light-based components closer to chips, which can help data move faster and use less power.

What deals and targets did Corning highlight?

CNBC cited several large customer relationships behind the longer-term bull case. Corning announced a multibillion-dollar agreement with Amazon in June to provide optical fiber for U.S. data centers, and Meta said in January it would pay Corning $6 billion for fiber-optic cables. CNBC also said the company has suggested another large deal may be coming, though no confirmed details were provided.

Corning reaffirmed long-term sales targets, according to CNBC. The company is aiming for a $20 billion annualized sales run rate by the end of 2026, $30 billion by the end of 2028 and $40 billion by the end of 2030. CNBC said that would imply a 19% compound annual sales growth rate between the fourth quarter of 2026 and the fourth quarter of 2030, with earnings expected to rise faster.

Other parts of the business were mixed. CNBC said glass innovations missed sales expectations, though margin performance helped offset the shortfall. Corning also benefits from Apple device glass, automotive products and diesel-related demand, according to CNBC. In solar, sales grew quickly, but income missed expectations, with management saying both sales and profits should improve starting in the third quarter.

This story draws on original reporting from CNBC.