Corning Hits All-Time High After $3.2 Billion Nvidia Announcement
Corning’s new factories will increase AI infrastructure capacity to meet demand from Nvidia.
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My mentor once said, “Buy strong stocks on pullbacks. Those stocks are strong for a reason.” He believed that eventually, news will come out that will justify the stock’s strength.
That’s exactly what just happened to Corning (GLW) , and the news was better than anyone could’ve anticipated.
Nvidia Deal
Shares of AI infrastructure play Corning roared higher by 12% on Wednesday, after the company announced a massive deal with AI chipmaker Nvidia (NVDA) . The deal will allow Nvidia to invest as much as $3.2 billion in Corning.
As part of the deal, Corning will build three new U.S. factories. Corning will use those factories to increase its manufacturing capacity for optical engineering products by 1,000%, and increase fiber production by 50%, in an effort to keep up with accelerating demand for AI infrastructure connectivity.
Raising Guidance
Corning also raised its long-term sales guidance. The company is now looking for $30 billion in annualized sales in 2028, up from $27 billion. Corning is targeting $40 billion in annualized sales by 2030.
The implication is that the demand for AI is so strong, that Nvidia is willing to help create the manufacturing capacity needed to meet the demand for AI infrastructure.
All Time High
Corning closed Wednesday at an all-time high. Just last week, we added to our existing position on a pullback to the stock’s 50-day moving average (blue). Our latest Corning buy has yielded a profit of about 22% in one week.
Corning reached an all-time high on April 24, just prior to reporting first quarter earnings (point A). Wall Street was unimpressed with Corning’s report, which showed both earnings and revenues beating estimates by about 1%.
Investors responded by selling the stock, dropping it into the vicinity of the 50-day MA (point B). It was a classic pullback within a bullish trend, indicated by a series of higher lows and higher highs.
Corning reached its all-time high on the stock’s heaviest volume in nearly two years, so it’s safe to assume that institutional investors were prominent buyers on Wednesday.
Bottom Line
One more thought from my mentor. He liked to say:
- Figure out what is working
- Use it until it is no longer working
- Repeat step one
AI infrastructure is the gift that keeps on giving, in the sense that it keeps on working. It’s the strongest sector in a strong market, and that’s not likely to change in the near future. Eventually, the charts will tell us to sell, but that hasn't happened yet.
Related: Should You Set Money Aside for SoftBank’s New AI Play?
At the time of publication, Ponsi was long GLW and NVDA.
