Analysts are buzzing about Corning's recent Q1 2024 earnings call, focusing on the company's projected $3 billion sales increase over the next three years. But there's a subtler, potentially more explosive detail buried within the transcript, one that hints at a coming "supercycle" in optical communications, driven by the burgeoning demands of Artificial Intelligence. While Wendell Weeks, Corning's CEO, cautiously outlines the opportunity, the implications of his words are staggering.

Let's start with the obvious: Corning is already the undisputed king of optical fiber. Their fiber shipments have consistently outpaced industry growth over the past decade, demonstrating a commanding market share and a keen understanding of the secular trends driving demand. They've deftly navigated through inventory corrections and macroeconomic headwinds, emerging operationally stronger with a leaner, more efficient operation.

But what's truly remarkable is the scale of the coming AI-driven demand wave. Weeks draws a compelling analogy between the traditional "front-end" network of CPUs in a datacenter and the emerging "back-end" network of GPUs needed for AI. He reveals that a typical GPU rack requires eight times the optical fiber density compared to a CPU rack, necessitating a radical rethinking of optical connectivity.

Here's where Corning's quiet confidence becomes electrifying. They've already anticipated this density explosion, pouring years of research and development into smaller, denser fiber, cable, and connector solutions. Their latest innovations, like the RocketRibbon cable with Flow Ribbon technology, boast a staggering 60% reduction in cable diameter while packing in close to 7,000 fibers per cable.

The real kicker? Weeks casually drops a bombshell: Corning's revenue per GPU in their recent customer wins is in the "low-single-digit hundreds of dollars." This seemingly innocuous statement has potentially earth-shattering consequences.

Consider this: the global AI chip market is projected to reach $200 billion by 2028, with GPUs dominating this landscape. If Corning, through their technological superiority, can maintain even a fraction of their current attach rate in the "low-single-digit hundreds of dollars" per GPU, the resulting revenue surge could dwarf their projected $3 billion sales increase.

This potential "supercycle" is fueled by a confluence of powerful forces. The insatiable hunger of AI for computational power, the inherent limitations of electron-based connectivity for high-density applications, and Corning's formidable technological prowess combine to create a perfect storm for unprecedented growth.

Further adding to this explosive cocktail is the anticipated rollout of BEAD funding for rural broadband expansion. While its impact in 2024 will be muted, the long-term demand boost from connecting millions of underserved Americans further strengthens the long-term growth trajectory for optical fiber.

Hypothetical Revenue Projection: Corning in the AI Supercycle

This chart illustrates the potential revenue Corning could generate from the AI chip market, based on a set of assumptions.

Here's a simple hypothesis, with some admittedly speculative numbers, to illustrate the magnitude of this opportunity:

Assumption 1: Corning captures 20% of the projected $200 billion AI chip market by 2028.Assumption 2: Their average revenue per GPU is $200.

This back-of-the-envelope calculation yields a potential revenue stream of $8 billion from AI alone by 2028. Even if these assumptions prove overly optimistic, the sheer scale of the opportunity is evident.

Corning's Q1 2024 earnings call reveals more than just a company poised for growth; it whispers of a potential revolution in optical communications, fueled by the relentless advance of Artificial Intelligence. The company, known for its steadfast commitment to long-term, durable growth, may be quietly positioning itself at the epicenter of a technological tsunami.

"Fun Fact: Did you know Corning invented the glass for the light bulb, revolutionizing the world by bringing light to the masses? Now, over a century later, they may be on the verge of another revolution, illuminating the path to the AI-powered future."