Should Corning Be in Your Portfolio Post Strong Q4 Earnings?

Corning Incorporated GLW reported impressive fourth-quarter 2025 results, with adjusted earnings and revenues exceeding the respective Zacks Consensus Estimate. Top-line expansion year over year was driven by the resilient business model, robust portfolio and its ability to readjust and respond quickly to changing market scenarios.

Strength in Optical Communications and Specialty Materials Aid GLW

The Optical Communications segment has emerged as the primary growth engine of Corning. Rapid buildout of AI-enabled data center infrastructure is driving growth in this segment. The company recently inked a multiyear agreement with Meta Platforms. The deal is valued at $6 billion. Meta is set to utilize Corning’s leading-edge optical fiber, cable and connectivity products needed for high-speed AI data centers. It is expanding its North Carolina manufacturing facilities for this deal. This will boost Corning’s domestic supply chain and reduce exposure to geopolitical risks. GLW is set to benefit from hyperscaler AI data center spending in the upcoming quarters.

In the fourth quarter, Corning’s optical communication rose 24% year over year to $1.7 billion, while full-year sales surged 35% year over year to $6.3 billion. Enterprise business, which includes sales inside data center, grew 61% year over year. Growing demand for data center interconnects led to 15% year-over-year growth in the Carrier Network business.

Specialty Materials remains Corning’s high-margin growth driver. Its fourth-quarter sales grew 4% year over year to $544 million. Net income rose 22% year over year in the fourth quarter. Strong growth in the Gorilla Glass business, with flagship smartphones featuring Corning’s innovative cover materials, boosted net sales in this segment. Growing collaboration with Apple has created a long-term growth driver for Corning for the upcoming quarters. Samsung is using Corning’s ultra-thin bendable glass solution in the new Samsung Galaxy Z TriFold, a multifolding device. Such innovation bodes well for sustainable growth.

Major Challenges for Corning

Corning’s growth in the Optical Communications segment is heavily dependent on hyperscaler spending on AI infrastructure. Any changes in the demand pattern induced by macro headwinds or other factors can significantly impact its net sales growth. The company is also witnessing weakness in the Display segment, with net sales declining 2% year over year. It is heavily reliant on price adjustments and currency hedging to maintain its margin. Moreover, Corning is facing growing competition from other industry leaders in the data center and optical connectivity domain, such as Amphenol Corporation APH and Ciena Corporation CIEN.

End market diversification is limited within the Display and Optical segments, which account for more than half of total revenues. Since the Display Technologies and Specialty Materials segments are largely dependent on consumer spending, particularly on LCD TVs and mobile PCs, this further narrows down the market.

Its Automotive business segment is witnessing headwinds owing to weakness in light and heavy-duty markets, particularly in Europe and North America. Management expects that this downtrend will likely persist in the current fiscal year.

Price Performance

Corning has gained 112% compared to the communications components industry’s growth of 117.6%. The stock has outperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
 

It has underperformed compared to its competitor, such as Ciena, but outperformed Amphenol. Ciena has surged 208.8%, while Amphenol has increased 108.5%.

Estimate Revision Trend

Earnings estimates for Corning for 2025 and 2026 have increased over the past 60 days.

Key Valuation Metric of GLW

From a valuation standpoint, GLW is currently trading at a discount compared with the industry. Going by the price/earnings ratio, the company’s shares currently trade at 35.34 forward 12-month earnings, lower than 36.74 for the industry.

End Note

Corning is witnessing solid momentum in the AI data center and consumer electronics market. Large customer wins, and growing collaboration with industry leaders, such as Meta, Apple and Samsung, is driving growth. Disciplined cost control and price adjustments are driving operating margin. Upward estimate revision highlights growing investors’ confidence in the stock’s growth potential. However, weakness in the Display and Automotive segments remains a drag on top-line growth. The company is exposed to customer concentration risks. Macroeconomic challenges and geopolitical uncertainties also remain a concern. With a Zacks Rank #3 (Hold), Corning appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research