Corning (GLW), valued at $38.19 billion by market cap, is engaged in display technologies, optical communications, specialty materials, and life sciences businesses. It offers glass substrates for liquid crystal displays (LCDs) and organic light-emitting diodes (LEDs) used in devices such as televisions, desktops, and tablets. Further, it provides optical fibers and cables, glass ceramics, crystals, and filter products, among others. 

While the artificial intelligence (AI) narrative has largely been driven by big tech giants such as Nvidia (NVDA), Microsoft (MSFT), and Meta Platforms (META), Corning is one stock flying under the radar. Let’s see why. 

How Did Corning Perform in Q2 of 2024?

In the June quarter, Corning reported revenue of $3.6 billion, an increase of 3.4% year over year, while adjusted earnings per share stood at $0.47. Comparatively, the company had previously guided for earnings of $0.44 per share, at the midpoint, and the results also surpassed Wall Street's forecast. During the quarter, Corning entered into an agreement with Lumen Technologies (LUMN) to sell 10% of its fiber capacity, a solution that helps to build faster connectivity between two AI data centers. 

The optical communications business reported 20% growth over the three-month period as sales rose to more than $1 billion in Q2, led by demand from generative AI generative products. Corning’s display technologies business also reported sales of $1 billion, an increase of 9% compared to the year-ago period. Comparatively, the specialty materials business reported revenue of $501 million, up 18% year over year, while Life Sciences sales rose 8% to $249 million. 

Alternatively, businesses such as environmental technologies and emerging growth experienced a top-line decline due to cyclical and pricing pressures. In Q2, GLW's gross margin improved by 1.1 percentage points while operating margin growth was higher at 1.9 percentage points. 

What's Next for Corning?

Corning expects sales of $3.7 billion in the current quarter, an increase of 5.7% year over year. Its adjusted EPS is forecast at $0.52 per share, compared to $0.45 per share last year. Corning emphasized that its outlook is based on the adoption of optical connective products by AI players. 

Additionally, it is positioned to benefit from demand in other verticals, such as broadband expansion and automobile-based clean energy technologies. Earlier this year, Corning explained that it is expanding its customer base due to sizeable investments in data centers. 

Corning also pays shareholders an annual dividend of $1.12 per share, translating to a forward yield of 2.5%. These dividend payments have almost tripled in the last 10 years, significantly enhancing the yield-at-cost.

What's the Target Price for Corning Stock?

Investors should note that compared to AI stocks like Nvidia, Corning is growing at a much slower pace, and should trade at a lower multiple. 

Analysts tracking Corning expect sales to rise from $13.58 billion in 2023 to $14.26 billion in 2024, with continued growth to $15.23 billion in 2025. Its adjusted earnings are forecast to expand from $1.70 per share in 2023 to $2.27 per share by 2025. Priced at 19.7 times forward earnings, GLW stock is reasonably valued, given earnings are forecast to grow by 14% annually in the next five years. 

Out of the 12 analysts covering GLW stock, eight recommend “strong buy,” and four recommend “hold,” for a consensus opinion of “moderate buy.” 

The average target price for GLW stock is $47, indicating an upside potential of about 5% from current levels. The Street-high target is $55, a premium of 22.5% to Friday's close.