Corning stock sinks after earnings beat as AI trade unwinds

Corning stock earnings topped Wall Street expectations for the quarter ended June 30, but the specialty glassmaker’s shares fell more than 18% on Tuesday to about $115 at the day’s low. CNBC attributed the sell-off mainly to a broader retreat from stocks tied to artificial intelligence infrastructure rather than to a deterioration in Corning’s reported operating performance.

Corning said core revenue rose 17% from a year earlier to $4.74 billion, above the $4.61 billion consensus estimate compiled by LSEG. Adjusted earnings per share increased 30% to 78 cents, compared with the 76 cents expected by analysts, according to LSEG data cited by CNBC.

The share-price reaction put the earnings beat in tension with investor positioning after a strong run in AI-related equities. CNBC’s Investing Club, associated with Jim Cramer’s Charitable Trust, said the stock had been caught in indiscriminate selling across companies viewed as beneficiaries of AI data-center spending. Cramer said during the club’s Tuesday meeting that sharp, leveraged rallies can reverse quickly as margin calls and short selling add pressure.

Why did Corning stock fall after earnings?

CNBC said the decline appeared to reflect a rotation out of AI-linked shares after large gains in the first half of the year. The commentary also noted that Corning’s forward sales guidance was slightly below consensus at the midpoint, although it described that as a contributing factor rather than the main driver.

For the current quarter, Corning management projected core sales growth of about 16%, implying revenue of roughly $4.9 billion to $5 billion. LSEG consensus stood at $4.97 billion. The company forecast core earnings of 85 cents to 89 cents a share, above the 85-cent LSEG estimate at the midpoint.

Corning also reaffirmed multi-year growth objectives, including an annualized sales run rate of $20 billion by the end of 2026, $30 billion by the end of 2028 and $40 billion by the end of 2030. CNBC said that path would imply a 19% compound annual sales growth rate between the fourth quarter of 2026 and the fourth quarter of 2030, with earnings expected by the company to rise faster.

What parts of Corning are growing fastest?

CNBC said the company’s optical communications and solar operations drove the revenue beat. Optical communications sales rose 32% year over year, while solar sales increased 90%. The optical communications unit is central to Corning’s data-center exposure because it supplies fiber-optic products used to move information through networks.

Within optical communications, enterprise sales grew 65% from a year earlier and sales tied to AI data centers nearly doubled, according to management comments cited by CNBC. The company said reported results reflected scale-out fiber demand, meaning connections between server racks across a data center, and had not yet included benefits from scale-up or photonics demand.

Scale-up refers to connections inside server racks. Photonics, in this context, involves moving optical technology closer to chips through co-packaged or near-packaged optics, reducing reliance on plug-in interfaces and placing optical engines nearer the main processor.

CNBC also cited Corning’s recent large customer agreements. In June, Corning announced a deal worth billions of dollars with Amazon to supply optical fiber for U.S. data centers. In January, Meta said it would pay $6 billion to Corning for fiber-optic cables.

The glass innovations segment was weaker, missing sales expectations, according to CNBC, though profit-margin performance helped offset the shortfall. Management said higher display glass sales supported growth and said Corning expected to outperform in mobile devices despite the pressure from elevated memory prices.

CNBC’s Investing Club said it kept its 2 rating on Corning and reduced its price target to $180 from $245. It said Jim Cramer’s Charitable Trust is long GLW and would watch trading volume, price action and updates from large cloud infrastructure buyers before changing its approach.

This story draws on original reporting from CNBC.