Nvidia stock (NASDAQ: NVDA) rose about 5.8% on Wednesday after the company unveiled a $500 million partnership with Corning to expand US optical connectivity manufacturing for AI data centers.
The development also pushed Corning stock 20% in premarket trading.
The market clearly liked the strategy as this was not just a supply deal, but a signal that AI spending is moving deeper into the infrastructure stack.
Still, the reaction also exposed the central tension in the trade as bulls see a bigger AI buildout story, while skeptics see a stock that has already run a long way.
Nvidia-Corning partnership: What the deal actually does
The mechanics are straightforward as Nvidia is set to receive a pre-funded warrant to buy 3 million Corning shares at $0.0001 apiece.
Moreover, the chip giant will also get the right to buy as many as 15 million more shares at $180 each, for a total potential investment of $500 million.
In return, Corning said it will expand US optical connectivity capacity tenfold, lift domestic fiber production by more than 50%, and build three new manufacturing plants in North Carolina and Texas, with more than 3,000 jobs expected.
Put simply, Nvidia is not just buying components here; it is buying a seat at the table in the AI supply chain.
Why the bulls are charging
Jensen Huang framed the deal as part of something larger, saying AI is driving “the largest infrastructure buildout of our time” and creating a “once-in-a-generation opportunity” to revive manufacturing and supply chains.
Corning backed that optimism with a bigger growth plan of its own, lifting its long-term sales outlook to a $20 billion annualized run rate by the end of 2026, $30 billion by the end of 2028, and $40 billion by the end of 2030.
That helps explain why Wolfe Research raised its Corning price target to $230 from $185 and kept an Outperform rating.
Wall Street’s optimism was not limited to Corning. Goldman Sachs maintained its Buy rating on Nvidia and reiterated a $250 price target based on a 30x price-to-earnings multiple.
Nvidia’s own Street view also remains firmly upbeat, with Investing.com showing a Strong Buy consensus and an average target of $269.17.
Nvidia stock: The caution flag
The caution argument starts with valuation as Corning is now trading at nearly 99 times trailing earnings, with a forward P/E still above 53, a demanding price for a manufacturer that still has exposure to slower-moving industrial segments.
Corning’s second-quarter revenue forecast came in below Wall Street expectations, even as AI-related demand remained strong, underscoring how much enthusiasm is already embedded in the share price.
Technicians are also watching the $200 area as the next resistance zone, while RSI around 52.6 points to neutral momentum rather than an overbought blowoff.
Dilution is not the main risk, but it is worth keeping in mind.
If Nvidia exercises the full 18 million shares, that would amount to just over 2.1% of Corning’s 860.6 million shares outstanding.
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