By Corning reported better-than-expected first-quarter results but issued a softer revenue outlook for the current quarter, weighing on investor sentiment and halting a recent rally in optical communications stocks.
The company posted adjusted earnings of 70 cents per share for the quarter, edging past analysts’ estimate of 69 cents, according to FactSet.
Core sales rose 18% year-on-year to $4.35 billion, also ahead of expectations of around $4.3 billion.
Despite the earnings beat, Corning’s guidance fell short on the top line.
The company forecast second-quarter core sales of about $4.6 billion, below Wall Street estimates of roughly $4.63 billion, according to LSEG.
Adjusted earnings are expected in the range of 73 cents to 77 cents per share, broadly in line with analyst projections.
Shares of the company dropped more than 10.24% in premarket trading following the update.
The stock had surged 85% so far this year through Monday’s close, reflecting strong investor enthusiasm around artificial intelligence-linked infrastructure plays.
AI demand drives optical communications growth
Corning has emerged as a key beneficiary of the ongoing buildout in artificial intelligence infrastructure, particularly through its optical communications segment.
The division, which includes fiber-optic cables, hardware, and connectors, generated $1.85 billion in net sales in the first quarter, up 36% from a year earlier and surpassing estimates.
The company also announced it had finalized two additional hyperscaler agreements, each similar in size and duration to its previously disclosed $6 billion deal with Meta Platforms.
These long-term partnerships are aimed at supporting the connectivity demands of high-capacity data centers in the US.
Corning’s fiber and cabling components have become critical to data center expansion, as hyperscalers accelerate investments to support next-generation AI platforms.
This momentum has positioned the optical communications business as the company’s largest and one of its fastest-growing segments.
In addition to AI-driven growth, Corning highlighted gains in its newer solar business, where sales rose sharply during the quarter, contributing to overall revenue expansion.
Consumer electronics weakness offsets gains
While AI-related demand remains robust, Corning continues to face pressure from its traditional end markets, particularly consumer electronics. Slower smartphone replacement cycles and cautious consumer spending have weighed on volumes for its specialty glass products.
The company, a key supplier to Apple, has been impacted by softer global smartphone demand. Its glass innovations segment, which includes display technologies and specialty materials, recorded modest growth of 1% to $1.42 billion in the first quarter.
This weakness in consumer-facing segments has partially offset the strong performance in optical communications, contributing to the more muted revenue outlook for the second quarter.
Broader sentiment in AI-linked stocks also turned cautious.
Shares of optical networking peers, including Ciena, Coherent, and Lumentum, declined in premarket trading alongside Corning.
The pullback came amid a broader tech selloff after reports that OpenAI missed its own revenue and growth targets, raising concerns about near-term expectations in the AI ecosystem.
Despite near-term headwinds, Corning’s long-term growth outlook remains tied to continued investments in data centers and connectivity infrastructure, even as its legacy businesses navigate a slower recovery.
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