Corning's Breakout Potential: Why Morgan Stanley's Equal-Weight Stance Underestimates AI-Driven Growth

The investment case for Corning (GLW) has gained significant momentum in late 2025, driven by surging demand for its optical communications and AI infrastructure solutions. Yet, Morgan Stanley's persistent "Equal-Weight" rating, despite multiple analyst upgrades and a bullish sector outlook, appears to understate the company's growth trajectory. A synthesis of analyst sentiment, technical indicators, insider activity, and sector dynamics suggests that Corning is poised to outperform broader market expectations in 2026, warranting a strategic reevaluation of its valuation.

Analyst Upgrades and Sector Momentum

Corning has attracted strong analyst attention in late 2025, with Morgan Stanley raising its price target from $82 to $98 on December 17, 2025, while maintaining an equal-weight stance. UBS and Citigroup further reinforced optimism, setting targets of $109 and $99, respectively. These upgrades reflect confidence in Corning's ability to capitalize on AI-driven demand for high-speed fiber connectivity, particularly in data centers. The company's Optical Communications segment, which accounts for 40% of its revenue, is projected to grow by 39% in 2025, reaching $6.5 billion in sales. Analysts attribute this to the 58% year-over-year surge in enterprise optical communications revenue in Q3 2025, driven by Gen AI fiber systems that enable denser data center interconnects.

The broader optical communications market is also expanding rapidly. By 2035, the global optical network equipment market is forecasted to grow at a 8.6% CAGR, reaching $65.1 billion, fueled by 5G rollouts and AI infrastructure needs. Corning's strategic partnerships, such as its $2.5 billion investment with Apple for Gorilla Glass production, further underscore its positioning in high-growth sectors. Despite these tailwinds, Morgan Stanley's equal-weight rating fails to reflect the company's potential to outperform industry benchmarks.

Insider Activity: Mixed Signals or Strategic Diversification?

Insider transactions in 2023–2025 reveal a mixed picture. Executives such as CFO Edward Schlesinger and CTO Soumya Seetharam sold shares totaling $14.09 million in Q4 2025, while CEO Wendell Weeks gifted 775,778 shares. However, these sales must be contextualized. Insiders now own just 0.32% of the company, a historically low figure that may reflect portfolio diversification rather than bearish sentiment. Notably, Corning's Q4 2025 guidance of $0.68–$0.72 EPS aligns with the "Moderate Buy" consensus from 15 analysts, suggesting that insider activity does not contradict the stock's long-term fundamentals.

Technical Indicators and Valuation Dynamics

Technical analysis of GLW's stock as of early 2026 presents a cautiously optimistic outlook. The 14-day RSI hovers around 50–54, indicating a neutral to slightly overbought condition, while the price remains above its 50-day and 200-day moving averages, signaling a bullish trend. The MACD indicator at 0.89 further supports a buy signal. However, a sharp decline to $42.25 in 2026, as predicted by one source, appears inconsistent with the broader analyst consensus. The average 12-month price target of $93.09 implies a 2.73% upside from the current price of $90.62, while technical analysts project a 12.73% increase to $98.71 by February 2026 according to CoinCodex. These figures starkly contrast with the $42.25 forecast, which is below the lowest analyst target of $60.00 according to MarketBeat.

Sector-Specific Growth: AI and Optical Communications as Catalysts

The interplay between AI and optical communications is a critical growth driver. Corning's upgraded Springboard plan now targets $4 billion in incremental annualized sales and a 20% operating margin by 2026, up from its original $3 billion goal. This acceleration is underpinned by the 30% CAGR in enterprise optical communications sales (2023–2027), driven by Gen AI adoption. The autonomous AI agent market, projected to reach $8.5 billion by 2026, will further amplify demand for high-speed, low-latency infrastructure. Corning's innovations in coherent optics and wavelength division multiplexing (WDM) position it to capture a significant share of this growth.

Rethinking Morgan Stanley's Equal-Weight Stance

Morgan Stanley's equal-weight recommendation, while technically neutral, overlooks the asymmetric upside in Corning's business model. The company's optical segment now contributes over half of its core profits, and its 20% operating margin target is being achieved a year ahead of schedule. Analysts project 2026 earnings of $3.02 per share, a 35% increase from 2025, which suggests that Corning's margin expansion and revenue growth could outpace broader market expectations. Given the sector's projected CAGR of 8.7% and Corning's leadership in AI infrastructure, a more aggressive rating-such as "Overweight"-would better align with its growth potential.

Conclusion

Corning's valuation dynamics are being reshaped by AI-driven demand, sector tailwinds, and operational execution. While Morgan Stanley's equal-weight stance acknowledges the company's stability, it underestimates the breakout potential of its optical communications and AI infrastructure businesses. With a "Moderate Buy" consensus, rising technical indicators, and a $93.09 average price target, investors should consider reevaluating GLW as a strategic play in 2026. The stock's alignment with high-growth, capital-intensive sectors positions it to outperform, making a compelling case for a more bullish rating.