Corning Shares Fall 5% on Shifted AI Timeline
Corning (GLW) shares dropped 5% in premarket trading on Thursday, reversing some of the stock's powerful 65% year-to-date climb. The decline followed comments from Broadcom's CEO Hock E. Tan, who pushed back the timeline for the widespread adoption of optical fiber within AI data center racks. The remarks also weighed on other optical-networking specialists like Ciena (CIEN), which traded lower despite reporting better-than-expected earnings and raising its guidance.
Broadcom CEO Touts Copper's Near-Term Cost Advantage
On a conference call Wednesday, Broadcom's CEO stated that the transition from copper to fiber for connecting components within a single AI rack—a process known as "scale-up"—is unlikely to happen this year or next. Tan argued that for these specific applications, copper provides "the lowest latency, lowest power, and lowest cost." This view directly impacts Corning, which announced a collaboration with Broadcom last year on co-packaged optics (CPO), a technology designed to connect AI chips using optical fiber to boost processing power and efficiency.
Analysts See CPO Inflection 2-3 Years Away
The market's reaction reflects a recalibration of investor expectations rather than a fundamental threat to optical technology. The transition to fiber is still viewed as a matter of "when," not "if." William Blair analyst Sebastian Naji stated the CEO's comments were "generally aligned with our view that CPO adoption is still likely 2–3 years away from seeing a meaningful inflection." This suggests that while the long-term thesis for fiber in AI remains intact, the immediate revenue impact for suppliers like Corning has been delayed.
