CORNING INC /NY Q2 FY26 earnings call GLW

Corning unveiled its upgraded Springboard plan, targeting annualized sales run rates of $20 billion by end of 2026, $30 billion by end of 2028, and $40 billion by end of 2030. This represents an acceleration in growth, with a projected sales CAGR of 19% from Q4 2026 to Q4 2030, and earnings expected to grow faster than sales, alongside significantly higher returns on invested capital and free cash flow. The plan incorporates assumptions like a weaker JPY, flat TV/IT/smartphone markets, declining ICE demand offset by increased auto content, and a larger solar opportunity.

The Optical Communications segment was a key driver of Q2 performance, with sales up 32% year-over-year to over $2 billion and net income up 77%. Enterprise sales, specifically related to Gen AI products, nearly doubled, growing 65% year-over-year to $1.27 billion. The company anticipates a 1.3x to 1.5x increase in optical content per GPU by 2028, potentially much higher by 2030, driven by cluster size growth (requiring a third optical layer for clusters >130,000 GPUs) and the emerging scale-up opportunity.

Corning is establishing a new Photonics map, aiming for a $10 billion revenue stream by 2030. This initiative focuses on bringing optics inside the box for co-packaged and near-package optics, addressing latency, density, power, and reliability challenges. This represents a new market for Corning's passive photonics, managing light within the Silicon Photonic Optical Engine, where historically no content existed. The scale-up opportunity is expected to dramatically increase the size of this market.

Corning continues to deepen relationships with industry leaders, securing long-term agreements. Recent examples include a multiyear agreement with Meta (up to $6 billion) for optical fiber, cable, and connectivity solutions, and partnerships with NVIDIA and Amazon to supply advanced optical connectivity for next-generation AI infrastructure and expanding data centers. These commitments underpin Corning's growth plans and help share investment risks.

The solar segment saw sales grow 90% year-over-year to $438 million, despite reporting a net loss of $7 million in Q2. This loss was attributed to an additional $30 million expense from an extended maintenance shutdown and equipment upgrade at its solar wafer facility. Management expects sales and profitability to improve significantly starting in Q3, driven by strong customer demand and the company's unique position as the only U.S.-based polysilicon and wafer manufacturer.

Comparing Q2 FY26 to the Q4 FY23 Springboard starting point, Corning has increased sales by 45%, improved operating margin by 460 basis points, doubled EPS, and expanded ROIC by 610 basis points to 14.9%. The company expects to maintain or exceed 20% operating margins, improve ROIC into the high teens, and generate significantly more free cash flow throughout the planning cycle, leveraging long-term agreements to share investment risks.