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Corning expects second-quarter 2024 sales to outperform initial expectations, driven by strong adoption of its new optical products for generative AI
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The company’s optical solutions enable AI networks to connect large GPU clusters with higher fiber connections, boosting network efficiency and density
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Corning’s “Springboard” plan aims to increase annual sales by $3 billion over the next three years, leveraging trends like GenAI
Optical manufacturer Corning shared some good news about its expected sales for the second quarter of 2024. Initially, the company thought it would make about $3.4 billion in core sales, but now it expects around $3.6 billion, thanks to generative artificial intelligence (GenAI).
Corning’s expected outperformance is primarily driven by the strong adoption of its new optical fiber, cable, connectors and hardware specifically designed to enable GenAI networks, a company spokesperson told Fierce Network.
Top AI players are using Corning solutions “to quickly and reliably connect the large GPU clusters to create the neural network that is needed to enable Generative AI,” the spokesperson said.
Those technologies help GPU clusters get up and running faster and with less labor, while also increasing the density of the network. Where a traditional data center with legacy server racks would require approximately 3 million fiber connections, now the large GPU clusters can have nearly 40 million terminations, the spokesperson explained
Corning expects to grow by more than $3 billion in annualized sales in the next three years due to “a combination of cyclical factors and secular trends.” That includes the rise of GenAI, a secular trend where the company anticipates more growth to come with the next generation of GPU racks.
Dell’Oro analyst Baron Fung noted that Corning has been “quite interested” in his GPU and custom accelerator chip research.
“Definitely, more GPUs and custom accelerators means more fiber that is needed to connect these accelerated servers together,” he told Fierce Network.
For Gen AI, additional connections are needed to interconnect servers in a back-end network in a dense fabric. Thus, Corning should see an increase in demand for its optical fibers with Gen AI, Baron explained.
Although optical fibers are the primary medium to connect these servers together, copper cables are also used in some instances, and Corning does not play in the copper cable business, Baron noted.
Corning believes that the first quarter of 2024 will be its weakest this year, part of the company’s “Springboard” plan, which includes the goal of increasing annual revenue to $3 billion in the next three years.
The manufacturer has remained optimistic through rough seas. Corning’s results for the fourth quarter and full year 2023 showed sales “well below” its long-term trends, and the company reported sales of $3.26 billion in Q1, down 3% from the same quarter in 2023.
However, the company has patiently waited for COVID-driven supply chain issues to subside and is looking to BEAD and AI to right the ship.
Corning expects to see profits and cash flow grow in the coming quarters. The company claims it already has the necessary production capacity and technical capabilities in place, with the related costs accounted for.
In a release, Corning CEO Wendell Weeks said that the company is off to a strong start with the “Springboard” plan, having begun buying back shares in the second quarter due to its confidence in its success.
