An Nvidia-backed fiber-optic manufacturer is heading for its worst day in 24 years. Why?

Shares of Corning, a manufacturer of optical fiber and a supplier of glass for the iPhone, fell as much as 18% on Tuesday, marking their worst performance in 24 years, according to CNBC and Barron's. The plunge came after the company released its quarterly earnings report: investors were disappointed by Corning’s revenue forecast for the third quarter. If the downward trend continues, today’s drop could be Corning’s sharpest since July 31, 2002, according to Dow Jones Market Data, as noted by Barron’s.

The plunge in Corning's stock sent shares of other companies in the optical networking sector tumbling: Ciena, Coherent, and Lumentum are all trading lower.

The company reported adjusted earnings per share of $0.78 for the second quarter, which was higher than the $0.60 reported a year earlier and exceeded Wall Street’s expectations of $0.76. Revenue rose 17% year-over-year to $4.74 billion, which also beat analysts’ forecasts of $4.63 billion. Moreover, the optical communications segment—which has become Corning’s largest business—generated net revenue of $2.07 billion, — a figure that was 32% higher than a year earlier and 12% higher than in the previous quarter, as noted by Barron’s.

Meanwhile, for the current—third—quarter, Corning forecasts adjusted earnings of $0.85 to $0.89 per share on revenue of $4.9 billion to $5 billion. According to FactSet, Wall Street analysts had expected earnings of $0.85 per share for this period, with revenue in the range of $4.99 billion.

During the earnings conference call, company executives stated that, according to management estimates, Corning will be able to achieve significant growth as the scale of AI data center clusters increases, and expects its average annual sales growth rate to rise by 19% from the fourth quarter of 2026 through the fourth quarter of 2030.

Wall Street apparently expected more from Corning's forecasts and comments, Barron's notes.

Corning has become one of the most unexpected beneficiaries of the development of AI technologies—even though the company is best known as a manufacturer of glass used, among other things, in the iPhone, optical communications is its largest and fastest-growing business. CNBC reported that Corning has supplied millions of miles of cable to connect racks in the AI data centers of all the major players.

In May, Nvidia announced a partnership with Corning and an investment in the company of up to $3.2 billion (CNBC noted that the company is likely preparing to replace copper with Corning’s optical fiber in its AI systems). Prior to that, Amazon had signed a multibillion-dollar deal with the company.

Of the 20 Wall Street analysts who cover the company's stock, 15 recommend buying it. Another six recommend holding it.

This article was AI-translated and verified by a human editor