Corning's Fiber Demand Set to Surge with AI-Driven Advancements, UBS Predicts

Corning Incorporated is set to benefit from the growing demand for fiber driven by artificial intelligence (AI), according to UBS. The company is the world leader in the production and marketing of specialty glass and ceramic substrates. Corning's products are used in various markets, including telecommunications, electronics, environment, life science, and others. The company's net sales are distributed across different regions, with the United States and Asia/Pacific being the major contributors.

UBS has upgraded Corning Incorporated (NYSE: GLW) to a "Buy" rating, citing accelerating AI-driven fiber demand as a key growth driver. The investment bank lifted its price target to $84 from $65, implying a 25% upside from current levels. UBS analysts forecast Corning's Optical Communications unit to deliver a 27% sales compound annual growth rate (CAGR) through 2027, with 2027 revenue estimates about 18% above consensus.

Corning's Optical Communications segment, which contributed just 15% of profits a decade ago, now accounts for about 40% and is projected to exceed 50% in the coming years. UBS estimates that of the ~$2.4 billion in earnings growth between 2024 and 2029, about $2.1 billion will come from Optical. This shift is driven by the increasing demand for fiber content in data centers built on Nvidia's new 72-GPU Blackwell architecture, which requires about four times the fiber content of the prior Hopper generation.

Beyond fiber, Corning has growth opportunities in solar, specialty glass, and automotive. UBS expects solar to add about $1.5 billion in sales by 2028, supported by long-term contracts. The company has secured 80% of restarted U.S. solar capacity over the next five years, creating a potential $1.5 billion sales lift at margins at or above the corporate average. UBS also modeled free cash flow of roughly $1.6–2.0 billion annually in 2025–26, leaving $0.5–1 billion per year available for buybacks or growth capex even after dividend payments.

UBS raised its next twelve months (NTM) EPS estimate to $3.35 and applied a higher 25x multiple, more in line with AI-linked industrial peers. The bank expects Corning's adjusted EPS to grow at a ~20% CAGR through 2029, a sharp step up from its historical mid-single-digit (MSD) pace. Forecasts now call for EPS of $3.05 in 2026 and $3.65 in 2027, both above consensus.

Corning's latest earnings report (Q2 2025) also showed strong performance, with adjusted earnings and revenues surpassing the respective Zacks Consensus Estimate. Optical Communications generated $1.56 billion in revenues, up 41% year over year. Net income from this segment improved to $247 million from $143 million reported in the year-ago quarter. Despite the strong performance, the stock has an aggregate VGM Score of C, indicating mixed investor sentiment. However, estimates have been trending upward, and the stock is currently ranked as a "Buy" by Zacks Investment Research.

References:
[1] https://finance.yahoo.com/news/ubs-upgrades-materials-stock-buy-130919198.html
[2] https://www.nasdaq.com/articles/corning-glw-74-last-earnings-report-can-it-continue