# Corning's Generative AI-Related Sales More Than Double, but Morgan Stanley Cuts Target

By Token Post

Canonical URL: https://www.tokenpost.com/news/insights/43164
Published: 2026-10-29T04:23:00.000Z
Updated: 2026-10-29T04:23:00.000Z
Section: Insights & Views

> Morgan Stanley raised its core earnings forecasts for 2026 and 2027 but kept an Equal-weight rating, identifying margin improvement as a test for a more positive view.

Morgan Stanley lowered its Corning price target to $155 from $165 while raising its core earnings forecasts for 2026 and 2027. In its Oct. 28 analysis, the bank identified stronger margins and profit conversion as tests for taking a more positive view.

Corning's optical communications business brought in $2.38 billion in third-quarter revenue, up 44% from a year earlier. Enterprise sales increased 84%, and generative AI-related sales more than doubled. Carrier revenue grew 4%.

Customer advances added $639 million to operating cash flow year to date, while free cash flow exceeded $2 billion. Long-term customer agreements support most growth-related capital spending. The advances provide cash before equipment and capacity begin generating sales, but Corning still must deliver products under those agreements and improve production efficiency.

Solar revenue climbed 37% from a year earlier to $436 million, roughly unchanged from the prior quarter. The business recorded a $7 million net loss as silicon wafer and module production ramp-ups lagged expectations and start-up expenses weighed on profit.

Variable compensation remained above normal in the third quarter, with most of the pressure outside optical communications. Management expects the expenses to stabilize in the fourth quarter and reset in 2027. Glass innovation revenue fell 3% to $1.51 billion, while net profit declined 10%. Higher memory prices weighed on consumer demand; display price increases are expected to contribute more in 2027.

Morgan Stanley raised its 2026 core revenue estimate to $19.4 billion from $19.3 billion and its core earnings-per-share estimate to $3.37 from $3.28. For 2027, it lifted core revenue to $23.2 billion from $22.8 billion and core earnings per share to $4.37 from $4.21. The bank maintained its Equal-weight rating.

The lower target reflects a reduced price-to-earnings multiple based on 2028 earnings: about 28 times, down from about 30 times. Morgan Stanley’s analysis said shrinking valuation multiples for AI-related stocks offset the higher earnings forecasts.

The bank identified sustained improvement in optical communications margins, strong profit conversion from added sales, and stabilization in solar and auto businesses as tests for a more positive view. It expects more substantial demand for optical links within AI clusters to build gradually in the second half of 2027. Risks include slower AI capital spending, delayed production ramps and continued weakness outside optical communications.