Key Takeaways:
- Corning Q2 core sales rose 17% to $4.74 billion, beating estimates
- Core EPS of $0.78 topped consensus of $0.76, up 30% from a year ago
- Shares slid 14% premarket as Q3 guidance fell short of Wall Street expectations
Geri
Corning posts 17% sales growth on AI demand, shares slide 14%
Corning reported Q2 core sales of $4.74 billion, up 17%, and core EPS of $0.78, beating analyst estimates.
"The results reflect strong execution and accelerating demand for our optical connectivity solutions," Wendell P. Weeks, Executive Chairman and CEO of Corning, said.
Optical Communications, the company's largest segment, posted net sales of $2.07 billion, up 32% from a year earlier, driven by a 65% surge in Enterprise Networks. The Solar segment generated $438 million in sales, up 90% year over year, though it recorded a net loss of $7 million. Corning said it expects Solar profitability to improve in the third quarter after completing an extended maintenance shutdown and equipment upgrade at its solar wafer facility.
The disappointment centered on guidance. Corning forecast third-quarter core EPS of $0.85 to $0.89 and core sales between $4.9 billion and $5 billion. Analysts had expected sales of $4.99 billion and earnings of $0.85 per share, according to Barron's. Shares fell 14% in premarket trading Tuesday.
During the quarter, Corning announced a multiyear, multibillion-dollar agreement with Amazon to supply optical fiber, cable and connectivity solutions for its US data centers. The company also formed a long-term partnership with Nvidia to expand US optical connectivity manufacturing capacity tenfold and increase domestic fiber production by more than 50%.
On a GAAP basis, net sales reached $4.51 billion and diluted EPS was $0.64, compared with $3.86 billion and $0.54 a year earlier. Core gross margin expanded to 39.6%, while core operating margin improved to 20.9%.
Corning upgraded its Springboard Plan, targeting 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. Weeks said the company expects a sales compound annual growth rate of 19% from the fourth quarter of 2026 through the fourth quarter of 2030.
The guidance miss suggests Wall Street's expectations for AI-related optical demand may have outpaced the pace of Corning's production ramp. Investors will watch the Q3 earnings call for updates on the Amazon and Nvidia partnership timelines and Solar segment margin recovery.
This article is for informational purposes only and does not constitute investment advice.
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