Goldman Sachs’ Best Phase 2 AI Stocks: Top 24 High Conviction AI Stocks

18. Corning Incorporated (NYSE:GLW)

Year To Date Share Price Gain: 52.38%

Number of Hedge Fund Investors in Q2 2024: 35

Corning Incorporated (NYSE:GLW) is a specialty industrial and communications materials and equipment provider that deals primarily with glass based items. Its customers include consumer technology companies and communications firms. Corning Incorporated (NYSE:GLW) is a stage two Goldman Sachs AI stock since its fiber optic cables are essential not only for high speed internet but also for a new use case involving data centers. While Corning Incorporated (NYSE:GLW)’s fiber glass cables were initially used to connect data centers to each other, another growing use case is their use within data centers. The hot demand for its products is evident by the fact that telecommunications firm Lumen has reserved 10% of Corning Incorporated (NYSE:GLW)’s global fiber capacity for the next two years for its AI enabled data centers. The firm’s Optical division also accounts for 30% of its revenue, and growth in data center revenue can help the firm meet its Springboard Plan. This aims for a 20% operating margin by 2026 and is a key part of its hypothesis.

O’keefe Stevens Advisory mentioned Corning Incorporated (NYSE:GLW) in its Q2 2024 investor letter. Here is what the fund said:

“Corning Incorporated (NYSE:GLW), another long-time holding, announced Q2 results would come in better than anticipated due to outperformance in their optical connectivity products used for Generative AI. Corning has long been a disappointing investment; with leading-edge technology, it consistently underperforms expectations. Their “springboard” plan, which revolves around $3 billion of excess capacity, seems to be the first sign in a long time that they are ready for a surge in growth. Management has frequently discussed the potential for operating leverage in nearly every conference call, anticipating a return to normal business conditions. Margins should expand over the coming quarters, driving EPS growth. The $3B in incremental sales could be worth in excess of $900m in EBITDA.”