We are initiating a position in Corning , buying 220 shares at roughly $85. Following Tuesday’s trade, Jim Cramer’s Charitable Trust will own 220 shares of Corning, representing 0.5% of the portfolio. We are calling up Corning from the Bullpen , where the stock has been roughly flat since being added about two weeks ago. The Bullpen is our watch list of stocks that could, under the right circumstances, join the Charitable Trust. The New York-based company — known for making all sorts of specialty glass, including fiber optic cables — is scheduled to report its third-quarter earnings next Tuesday, Oct. 28, before the market opens. This new purchase isn’t necessarily a call on the upcoming quarter. We are intentionally starting this position on the smaller side to give us room to buy more on a pullback. However, we do expect another strong set of results, fueled by surging sales in its optical communication enterprise business that is tied to growing demand for generative AI products. Our reason to buy this stock, which is already up about 80% year to date, is off the size of AI infrastructure spending that is expected over the next several years. On Nvidia’s last earnings call in August, CEO Jensen Huang estimated that there will be $3 trillion to $4 trillion in AI infrastructure spend by the end of the decade. But that number may be conservative based on recent partnership announcements: OpenAI, maker of the popular ChatGPT chatbot, has sealed deals with Nvidia, AMD , and Broadcom to secure compute. Dell Technologies also recently provided an encouraging data point on the acceleration of AI infrastructure spending. During its Capital Markets Day on Oct. 7, Arthur Lewis, president of Dell’s infrastructure solutions group, noted that industry estimates for AI investment continue to increase. “Over the next 3 years, more data will be created than in all of preceding human history. And by 2030, data centers around the world will require nearly $7 trillion in investment just to keep pace with the torrid demand of compute,” Lewis said. GLW YTD mountain Corning YTD So what’s Corning’s role in the AI infrastructure buildout? Historically, the company has benefited from the exponential growth in video consumption and the telecommunications industry’s shift from copper to optical-based networks, which offer greater capacity at lower cost. But the rise of artificial intelligence is also driving strong demand for fiber and connectivity products inside data centers. When UBS upgraded Corning stock to buy from neutral in early September, the analysts noted that modern AI data centers that use Nvidia’s Hopper or Blackwell systems require anywhere from four to 16 times more fiber content than legacy cloud switches. Based on UBS’s analysis of data center spending and density, they estimate Corning’s optical communications segment will increase revenue at a 24% compound annual growth rate through 2029. The company is also a huge supplier to Apple , and we see these results play out through its specialty materials segment. In August, Apple announced a $2.5 billion commitment to Corning to produce all of the cover glass for iPhones and Apple Watches in Corning’s Harrodsburg, Kentucky, manufacturing facility. Last month, Jim Cramer traveled to Kentucky and interviewed Corning CEO Wendell Weeks and Apple CEO Tim Cook to discuss the partnership. Corning has a few other reporting segments, and those are tied to the television display, automotive, and life sciences industries. The company is also on a multiyear journey to improve its performance through what it calls its “Springboard’ plan. This initiative was launched in the fourth quarter of 2023 with the original goal to increase annualized sales by $5 billion and expand margins by 400 basis points to 20% by the end of 2026. In March, Corning raised its internal target to $6 billion in additional annualized sales, which we see as a reflection of both strong product demand and management’s execution. We’re initiating the position with a price target of $92, which represents about 31.5 times the consensus 2026 earnings per share estimate of $2.91 and implies about 8% upside from current levels. However, we expect positive earnings revisions in the quarters ahead due to strong data center related spending. (Jim Cramer’s Charitable Trust is long GLW. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
