Corning strikes another multibillion-dollar AI deal. What the new Amazon pact means for the stock

Here is a story making headlines in the economy: Corning stock surged Monday after the company inked a major data center deal with Amazon — the latest in a string of high-profile wins for the Club holding. Amazon said it will pay Corning billions of dollars for optical fiber in the coming years to support its growing data center footprint. The investment will allow Corning to expand production and create 1,000 new jobs at its North Carolina manufacturing facilities.

The stock settled down a bit, but still closed up more than 5%. Investors cheered the boost to Corning's biggest reporting segment, optical communications. Revenue for the division jumped 36% year over year last quarter as hyperscalers turned to Corning for its fiber-optic cabling and networking solutions, which are essential to the build-out of AI infrastructure and data centers.

Economic Details

These hyperscalers include the likes of Meta Platforms, which disclosed a partnership with Corning back in January. Meta said it would spend up to $6 billion through 2030 for these fiber-optic cables in its artificial intelligence data centers. In late April, Corning also announced a supply agreement and $500 million investment from chipmaker Nvidia to bring more of its glass technology inside data centers.

"Can I tell you, this is unbelievable? " Jim Cramer said last month after the Nvidia deal. "This is a different Corning.

There's actual demand for it. The customers are real, and they are spectacular. " During Corning's earnings call on April 28, CEO Wendell Weeks shared that, along with Meta, there were two other agreements with hyperscale customers that were "very significant.

Analyst Views

" Details were light at the time, but Weeks told Jim Cramer a week later that each was worth more than Meta's up to $6 billion deal. "Probably the biggest commercial arrangement ever in my career we just entered into with Nvidia, and then these other two major ones are larger than the Meta deal that's been public on, and I'm sure some of those customers will want to be more open about that over time," Weeks said during "Mad Money" last month. It's unclear if Amazon is one of these two hyperscalers that Weeks mentioned.

A Corning spokesperson told CNBC that the company's "approach is to let our customers decide when and where they choose to make announcements about their supply chain decisions. " The spokesperson added that Amazon is just "one of many deals in our pipeline. " An Amazon spokesperson declined to comment on the deal size.

Even without confirmation, though, it's still encouraging to see that Corning has named a third alliance with some of the world's biggest tech companies in the span of just six months. Not only will each agreement boost revenue, but it will also lessen the risk of Corning expanding capacity too much. Corning has been burned before by capacity investments made ahead of revenue that never materialized.

Financial markets are tracking the development closely as investors assess the likely impact.