Key Takeaways
Corning (NYSE: GLW) shares fell as much as 9% on Tuesday despite the company reporting a first-quarter revenue beat, as its sales forecast for the second quarter came in just shy of Wall Street estimates.
The results highlight how a stock’s significant run-up can set a high bar for earnings, but CEO Wendell Weeks confirmed new deals that strengthen the company’s long-term growth case. "These deals are very significant, and they share the risk and rewards of the required expansions with our strategic customers," Weeks said, confirming two new long-term supply agreements with unnamed hyperscale customers.
For the first quarter of 2026, core sales rose 18% year-over-year to $4.35 billion, beating the consensus estimate of $4.26 billion. Core earnings of 70 cents per share were up nearly 30% from a year ago and in line with analyst expectations. Growth was driven by a 36% surge in the Optical Communications unit to $1.85 billion and an 80% jump in the newly-formed Solar segment to $370 million.
The negative stock reaction was primarily due to guidance that disappointed a market that had sent the stock up over 80% year-to-date. For the second quarter, Corning expects core sales of approximately $4.6 billion, implying 14% year-over-year growth but missing the $4.63 billion consensus. The outlook includes a $30 million expense from a planned maintenance shutdown at a solar facility.
Despite the slight guidance miss, the company solidified its position as a key supplier for artificial intelligence infrastructure. The two new supply agreements are said to be similar in size to a previously announced deal with Meta Platforms, which is worth up to $6 billion through 2030. This structure, where customers co-invest, de-risks Corning's capacity expansions and provides greater revenue visibility.
The quarter also marked the debut of Solar as a standalone segment. Its 80% revenue growth reflects strong momentum as the company scales its polysilicon and module production. While currently a small portion of the business, management has previously stated its goal to grow this into a $2.5 billion revenue opportunity.
The sharp pullback in the share price has created a division among analysts. Morningstar raised its fair value estimate to $105 from $95 but still views the stock as "significantly overvalued," arguing that a strong quarter was already priced in. Conversely, the CNBC Investing Club referred to the sell-off as a "gift" for investors who have yet to start a position, reiterating a $180 price target based on the long-term AI and solar growth stories.
The guidance suggests management expects demand to remain strong, particularly in its optical and solar businesses. Investors will look to the company's upcoming investor day next week for an updated multiyear growth outlook through 2030 and more details on a new "Photonics Market-Access Platform."
This article is for informational purposes only and does not constitute investment advice.
