Morgan Stanley: Corning Inc (GLW.US) has won a $6 billion deal with Meta (META.US) to become a powerful growth engine in the optical communications business.

Morgan Stanley stated that the $6 billion fiber optic supply agreement signed between Corning Inc (GLW.US) and Meta (META.US) will provide fiber optic products for the latter's data centers, with the potential to significantly boost Corning Inc's optical communication business. Benefiting from this partnership, Corning Inc's stock price surged over 16% on Tuesday. The company is expected to release its fourth-quarter earnings report before the US stock market opens on January 28. Morgan Stanley analyst Meta Marshall wrote in a research report to clients, "We had previously predicted that if there were related announcements before the earnings release, the stock price of the company might rise. Although we originally expected the announcement to more clearly disclose the timeline for expansion investments, the $6 billion agreement signed between Corning Inc and Meta, valid until 2030 and involving fiber optics, Optical Cable Corporation, and connectivity products, is of significant importance across all potential markets - covering capacity expansion, horizontal layout, and cross-domain expansion, with horizontal layout as the core." Marshall gave a "hold" rating for Corning Inc, with a target price of $98. She stated that as concerns about power consumption continue to rise, deploying fiber optics close to computational units becomes crucial, and fiber optics can meet the demand for high density and large scale expansion. Additionally, this partnership will further propel the expansion of Corning Inc's optical communication business, which currently contributes about 40% of the company's total revenue. She added in the research report, "Corning Inc disclosed that Meta is not currently the company's largest customer in the artificial intelligence (AI) field, but after this partnership, Meta will become the top customer in this field. We did not anticipate that Corning Inc would raise its performance target for 'Project Springboard' in the fourth quarter - affected by supply restrictions, the company had set a 30% compound annual growth rate target for its enterprise optical communication business for 2023-2027 and maintained it unchanged, but now, with the partnership agreement with Meta in place, we see a greater likelihood of an upward adjustment to this target."