Glass and optical fibre manufacturer Corning says its second-quarter sales figures will be around $200m higher than expected, due to generative AI’s use of optical connections.
The recent boom in generative artificial intelligence (AI) has led to an increased demand for optical connectivity products. Now Corning, one of the world’s leading manufacturers of high-quality glass and optical fibre components, has reported an unexpected rise in sales figures, which they put down to the emergence of the AI marketplace.
After company CEO Wendell Weeks stated that second quarter revenues would be roughly $200m higher than expected – rising from $3.4bn to $3.6bn – Corning’s value on the New York Stock Exchange rose by more than 10 per cent. “We expect second-quarter core sales to exceed our previous guidance and mark a return to year-over-year growth,” he said. “The outperformance was primarily driven by the strong adoption of our new optical connectivity products for generative AI.”
Rising optimism for optical fibre
Even though Corning’s Q1 results showed that fibre systems were 30% below trend, Weeks remained upbeat, telling investors he expected the market to improve, even in the short term. “We fully expect that gap to close,” said Weeks earlier this year, “adding more than 40% to our overall optical communication sales. In conversations with our large carrier customers during the quarter, they reinforced their commitment to increasing fibre developments in 2024 and beyond.”
Springboard Framework
Keeping faith that a low-performing Q1 will be the company’s lowest of the year, Corning’s ‘Springboard’ framework suggests it expects more than $3bn in annualised sales growth over the next three years, and this will be driven by both cyclical factors and trends. With a positive outlook in each of the company’s markets, Corning is in a strong position to capitalise.
“These [Q2] results reinforce our confidence in Springboard,” said Weeks. “We’re off to a great start with the plan. We’ve positioned the company to capture significant growth with powerful incremental profit and cash flow. Because of our confidence in Springboard, we began buying back our shares in the second quarter. We’re energised by the tremendous opportunity for value creation we’ve built for our shareholders.”
