Corning jumps 9% as optical stocks rally on AI chip demand

Optical communications stocks rallied in pre-market trading Thursday, with Corning Inc. jumping nearly 9%, as AI-fueled demand for data center networking components swept the semiconductor sector.

"Memory and networking components are the bottleneck in AI infrastructure buildout, and the market is pricing in multiyear tightness," said Tom Essaye, founder of Sevens Report Research.

Marvell Technology gained nearly 5%, Coherent rose more than 4% and Lumentum advanced over 3% in early trading. The rally followed Micron Technology's blockbuster quarterly report, which showed earnings per share of $25.11, topping the $20.86 consensus estimate, and guidance for the current quarter of $30 to $32 a share, well above the $25.72 analysts had expected. Micron said tight supply conditions would persist beyond calendar 2027 and that it had signed 16 strategic supply agreements with defined pricing to provide customer visibility.

The optical component makers supply the fiber-optic cables, lasers and photonic chips that connect data center servers — a market expanding as hyperscale cloud providers race to build out AI computing clusters. Apple Inc. highlighted the cost pressure Wednesday, announcing price increases on some MacBook and iPad models because of rising memory and component expenses.

The broader semiconductor complex benefited from the optimism. Qualcomm Inc. rose nearly 10% after its investor day, where it raised its fiscal 2029 non-handset revenue target to $40 billion, roughly double its prior goal, driven by a new data center AI infrastructure strategy that includes a multiyear deal with Meta Platforms Inc. to supply data center CPUs. The Philadelphia Semiconductor Index also gained, though the broader market remained mixed as the Magnificent Seven stocks continued their June selloff, with the group on track to shed $3 trillion in market capitalization this month.

For investors, the optical communications rally shows that AI infrastructure spending is broadening beyond GPU makers into the networking and connectivity layers. Corning, trading at 22 times forward earnings, stands to benefit as data center operators increase spending on fiber-optic interconnects. Marvell, whose custom AI silicon and networking chips compete with Broadcom Inc., offers another direct play on the data center buildout. The rotation into semiconductor and infrastructure names comes as the Magnificent Seven's combined market cap has fallen to $20.8 trillion from a June peak, with investors rotating into industrials, materials and energy stocks.

This article is for informational purposes only and does not constitute investment advice.