Heed the $500 Million Fiber AlarmBy Joel Litman, chief investment officer, Altimetry
 Chipmaker Nvidia (NVDA) wields a lot of power right now, even beyond semiconductors...
It can force investors to care about a business they ignored just the day before. That's exactly what happened with high-tech materials company Corning (GLW). Nvidia agreed to buy $500 million worth of ownership rights tied to GLW shares... to expand AI infrastructure. Corning, in turn, agreed to boost U.S. fiber-production capacity by more than 50%. It will also supply the optical cables that quickly move data among chips, servers, and networking gear. That puts Corning in the middle of the AI build-out. It also puts investors in a tricky spot... Even though Nvidia is backing this fiber-maker, Corning's stock may not be worth chasing. Throughout most of the AI boom, investors have obsessed over chips...They're the engines that train and run large AI models. And Nvidia controls the most valuable part of that market. It's why every new data-center plan seems to circle back to Nvidia. But a data center is more than just chips, which are still in high demand. Fiber-optic cable is just as hard to come by. Right now, the lead time for these new cables is more than a year.
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Earlier this year, Nvidia invested a combined $4 billion in Lumentum (LITE) and Coherent (COHR), both of which make optics equipment. Corning is a logical next target. With Nvidia's backing, Corning plans to build three new complexes in North Carolina and Texas... and create more than 3,000 U.S. jobs. The growth targets are big, too... Corning expects to reach $20 billion in annual sales by the end of 2026. It's targeting $30 billion by the end of 2028. Corning shares jumped as much as 21% on the news. In this deal, Nvidia could receive as many as 3 million GLW shares at a nominal price. It could also buy up to 15 million more shares at an exercise price of $180. That may be a smart supply-chain move for Nvidia... It gives the company more leverage over a component (fiber optics) that Nvidia's chips need to run. But as an investment, Corning needs to clear a higher bar...We can see this through our Embedded Expectations Analysis ("EEA") framework. The EEA starts by looking at a company's current stock price. From there, we can calculate what the market expects from the company's future cash flows. We then compare that with our own cash-flow projections. In short, it tells us how well a company has to perform in the future to be worth what the market is paying for it today. Fiber optics is an essential part of the AI build-out. But it's a historically lower-return business than chips. Case in point, Corning's Uniform return on assets ("ROA") has never surpassed 10%. (The U.S. corporate average is 12%.) At Nvidia's $180 exercise price, Corning would need a Uniform ROA of 26% to justify that level. Take a look... 
Investors are already pricing in a massive jump in Corning's profitability. AI demand will help the company sell every fiber-optic cable it makes... and that could boost returns. But it may not be enough to meet investor expectations. Nvidia's strategic move is stronger than Corning's stock...The Corning deal signals AI's next bottleneck – in fiber optics. But we believe it's a net positive for the industry. This partnership helps Nvidia protect its growth runway. And it gives Corning a clearer path toward profitability. That said, investors are already pricing in far more profitability than Corning has ever achieved. Fiber-optic demand alone may not generate the kind of Uniform returns they're anticipating. Investors should heed Nvidia's fiber alarm... and steer clear of Corning's stock. Regards, Joel Litman
June 4, 2026
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