| WEEKLY ROUNDUP Hello, Reader. 40% off select models. Up to 70% off clearance. Limit one coupon code per customer. We’ve been bombarded with Black Friday deals for weeks now. What used to be a one-day-only, in-store event has turned into a month-long celebration of “the best deals of the year.” So, in the spirit of the week, I’d like to share a relatively cheap and underappreciated AI play that I’ve been watching throughout 2024. Let’s take a look… If we were to play a word-association game and I said, “Artificial intelligence,” you might respond with something like “Nvidia,” or “Google,” or maybe “robots.” You probably would not say “Corning.” But as it turns out, this iconic glassmaker could benefit significantly from the AI boom, as a classic “pick and shovel” play. For more than 170 years, the Corning Inc. (GLW) name has been synonymous with best-of-breed glass products. It has continuously innovated and set the industry standard for excellence. Now, the path from AI to Corning is fairly direct and intuitive. AI technologies require enormous processing power from data centers. Because this new source of demand is surging, the companies that operate these “hyperscale” data centers are ramping up their capacity by building new centers and/or boosting the capacity and speed of existing centers. That means surging demand for the optical fiber and components that Corning produces. Importantly, the growing AI workloads not only require more data centers, but also more fiber optic connections per data center. According to Corning CEO Wendell Weeks, modern data center systems that rely on Nvidia Corp.’s (NVDA) popular Hopper H100 GPUs require 10 times more fiber optics than a conventional data center server rack. As Weeks explained on CNBC, “We’ve invented new fibers, new cables, new connectors, and new custom integrated optical solutions to dramatically reduce installation costs, overall time and space, and carbon footprint.” Therefore, it is easy to see how more data center processing power means “more Corning.” On average, Corning estimates that data centers running AI large language models (LLMs) will require five times more optical connectivity than they have today. In 2024 alone, these hyperscalers – like Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), and Meta Platforms Inc. (META) – invested about $200 billion in data centers, hardware, and other technologies required to deploy generative AI models. This massive investment caps a multiyear construction wave that has doubled the total capacity of hyperscale data centers during the last several years, according to Synergy Research Group. Synergy predicts capacity will double again during the next few years, as 120 to 130 new hyperscale centers come online each year. 
This building boom is finally showing up on Corning’s order books, with the company citing “strong adoption of our new optical connectivity products for Generative AI.” Coincident with the data center boom, Corning is seeing trend improvements in its other major end markets, like smartphones. As a result, Weeks believes a $3 billion to $5 billion revenue surge will land on Corning’s income statement over the next two years. If these expected sales arrive in a timely manner, Corning could earn as much as $3 per share within one year, and $3.50 within two years. At that level of profitability, Corning shares will be trading for 15 times 2026 earnings and just 13 times the 2027 result. Obviously, this hoped-for revenue surge is not yet in the door. But the trajectory is very promising. If/as/when this revenue does materialize, Corning shares could easily double from the current quote. So, as tech darlings like Nvidia and Amazon continue to prosper, I would favor the unloved Corning for the next phase of the AI boom. Now, let’s look at what we covered here at Smart Money this past week… | 
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