The tech sector is known for the dominance of software and digital platforms. This focus on computer “bits” enabled companies in the industry to build and distribute their offerings efficiently and cheaply, generating robust margins.
However, the arrival of artificial intelligence (AI) has led to a twist in this story. Tech businesses are now increasingly spending on “atoms,” the label describing capital-intensive physical assets such as data centers, where AI systems are housed.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
This industry shift is exemplified in AI tech titan Nvidia‘s recently announced partnership with glassmaker Corning (NYSE: GLW). The deal demonstrates Corning’s ability to see substantial business growth ahead.
Wall Street was sleeping on tech’s swing from bits to atoms, but is now waking up to Corning’s shift from a slow-growth producer of glass products into an AI company. Here’s a deeper look into Corning.
Corning’s AI opportunity
Corning has a long history as a materials science specialist in glass used for television screens and fiber optics. Its optical connectivity solutions drove the deal with Nvidia.
Jensen Huang, Nvidia’s CEO, had been saying for some time that traditional copper wiring, such as that used in data center equipment, was approaching performance limits. By partnering with Corning, the semiconductor giant has signaled a transition to light-based data transmission technology.
The partnership grants Nvidia the right to buy up to 15 million Corning shares at an exercise price of $180 per share. In exchange, the two will work together to expand Corning’s U.S.-based optical connectivity manufacturing capacity tenfold.
This manufacturing expansion indicates the magnitude of the anticipated demand to replace copper wiring with fiber optics. After all, the AI infrastructure market is forecast to see massive growth from $75 billion in 2026 to $497.98 billion by 2034, as data centers are upgraded to support artificial intelligence. This provides a substantial multiyear tailwind to Corning’s business.
Is Corning stock a buy?
Nvidia’s adoption of Corning’s solutions is just one significant revenue opportunity for the glassmaker. Nvidia’s new Vera Rubin AI system is massive, weighing about 2 tons and incorporating over 1 million parts. Connecting these components with copper wiring inhibits data transmission at the speeds required by increasingly sophisticated artificial intelligence models. This is why Nvidia turned to Corning’s optical solutions, which enable data transfers at the speed of light.
