According to Chasing Wind Trading Desk, JPMorgan Chase willCorningThe rating was downgraded to Neutral from Overweight and the price target was raised to $175 from $115 (based on expected 2028 earnings of $5.20 per share discounted at 35x P/E). Corning shares are trading at about $168, implying that the new price target implies only about 4% upside. Analysts believe that the current share price has fully priced the buyer's "blue sky scenario" of sharp price increase of optical fiber and large-scale deployment of AI.However, about 60% of Corning's non-optical business, the execution risk of capacity construction and the uncertainty of the rhythm of large-scale adoption of optical networks have not been fully reflected in the valuation.
According to JPMorgan data, optical network stocks NTM P/E has risen as much as 50% year-to-date, leading all its covered sub-sectors. The overall valuation of AI-related hardware suppliers is at a premium of 83% over the historical average, and the pricing of the optical network sector is particularly prominent — —The current valuation level requires investors to extend their sights to 2028 to prove from a fundamental perspective that there is considerable upside in the current share price,This is in contrast to network/switch or some IT hardware companies, which only need to refer to 2027 earnings forecasts to support the upstream logic.
At the fundamental level, JPMorgan Chase is not pessimistic about the demand outlook of Corning's optical fiber business, and simultaneously raised its revenue and profit forecast. However, analysts believe that this improvement has been fully or even over-reflected by the current valuation, and the position logic has changed from "fundamentals can keep up" to "valuation runs too fast".
Optical Network Sector: High Valuation Premium, Visibility as Core Threshold in 2028
Optical network is the core beneficiary area in the construction cycle of AI infrastructure, and it is also the hardware sub-sector with the most aggressive valuation expansion since the beginning of the year. According to the statistics of JPMorgan, the NTM P/E of optical network stocks has risen by 50% since the beginning of the year, significantly ahead of other AI-related sectors such as test and measurement (+44%) and HDD, while the valuation premium of EMS, network/switch, IT hardware and other sectors has been generally flat or contracted since the beginning of the year.However, this rapid valuation expansion has pushed the optical network sector into an awkward position:Investors must be willing to anchor their earnings estimates to 2028 to find sufficient valuation support for the current share price.The real profitability inflection point brought by the large-scale deployment of AI in most optical network companies is not expected to be fully realized on a larger scale until 2028. In contrast, EMS, network/switch and even some IT hardware companies can support the upward logic of stock prices with their 2027 profit forecast alone, without relying on more long-term assumptions.
In this context, JPMorgan Chase adopts a more selective allocation strategy for the overall covered optical network targets. The bank continues to maintain its overweight ratings on Ciena, Coherent and Lumentum on the grounds that these three companies have clearer visibility at the profitability turning point in 2028, and the profitability growth path from Scale-across and Scale-up opportunities is relatively clear; For companies whose valuation has been significantly ahead and whose profit visibility in 2028 needs to be further improved, they tend to be lowered or treated cautiously.
Corning: Optical Fiber Demand Prospects Good, But Valuations Are Ahead of Fundamentals
JPMorgan attributed Corning's downgrade to valuation issues rather than weakening fundamentals.Analysts are positive about the demand outlook for the fiber business and have raised their revenue and earnings forecasts for the company accordingly.In the updated forecast, JPMorgan raised Corning's total revenue forecast to $19.03 billion in 2026 (previously $18.6 billion) and $21.65 billion in 2027 (previously $20.9 billion), and newly established a 2028 forecast of $25.12 billion — corresponding to approximately $1.4 billion in annualized incremental revenue, even exceeding the approximately $1.1 billion increment set by Corning's own Springboard target.
The compound annual growth rate of optical fiber business revenue is about 30% during the forecast period, of which the compound growth rate of AI/data center interconnection-related revenue is more than 50%, exceeding the growth rate of data center capital expenditure and XPU shipment. EPS forecasts are upgraded accordingly: $3.20 in 2026 (previously $3.10), $4.15 in 2027 (previously $3.90), and a newly established forecast of $5.20 in 2028, corresponding to a compound growth rate of about 30%.
Nevertheless, JPMorgan believes the current share price has priced a more optimistic scenario than the forecast above.At present, Corning's NTM P/E exceeds 50 times, and its expected P/E in 2027 exceeds 40 times. Analysts judge that the buyer's expectation has embedded the blue sky scenario of substantial price increase for optical fiber cables/connectors and AI Scale-up opportunities. In terms of linearity of capacity construction, the rhythm of large-scale adoption of optical networks, and the non-optical business that still accounts for about 60% of the company's total profit, the fault tolerance space for execution errors is quite limited.
Fiber Pricing: Buyers Expect Overvaluation Risk
JPMorgan challenges the central assumptions of the buy-side argument. According to the exchange between analysts and investors,The assumption that fiber prices will rise sharply (by more than 30%) is embedded in the current buyer's optimistic expectation of Corning,And it is expected that a similar price increase will eventually push Corning's fiber optic business profit margin beyond the level of existing optical equipment within a few years.JPMorgan believes that there is a risk of overvaluation of this expectation. The spot price of optical fiber in the industry has indeed risen since the beginning of the year, and the thrust behind it isMetaConcerns about supply constraints have heated up following the signing of a lock-in capacity agreement with Corning. However, most of Corning's existing capacity has been contracted in advance to a small number of large, concentrated customers, with whom Corning has relatively limited initiative in pricing negotiations. JPMorgan Chase judged that the rise in optical fiber prices in the spot market can only benefit a small number of customers' purchases, and the net positive impact on the company's overall finance will be mild, far lower than the current expected level implied by the buyer.
Valuation Framework: 35x 2028 Earnings Discounted with Limited Target Implied Space
JPMorgan discounted Corning's 2028 earnings of $5.20 per share at about 35 times its target P/E, resulting in a December 2026 price target of $175,Only about 4% upside from the current share price of about $168.The premium valuation multiple of 35 times reflects the recognition of Corning's unique competitive position-as a large-scale vertically integrated optical fiber cable and connector supplier in the United States, it has scarcity attributes in the wave of AI infrastructure construction.However, JPMorgan Chase also pointed out that if the segment valuation method is adopted, the combined valuation of optical assets and non-optical assets will be dragged down by the discount of the latter's low growth rate, and the overall valuation multiple will be lower than that of similar companies in pure optical networks. The improvement in optical business earnings is real-JPMorgan Chase expects the optical business to contribute about 60% of the company's total earnings by 2028-but the amplification effect transmitted by this improvement to the company's overall revenue and earnings level will be lower than the higher resilience scenario assumed by the buyer. Analysts believe that at the current valuation level, if Corning's share price is to form a substantial upward trend, it needs to establish a clearer visibility of 2028 earnings, which is not yet fully met.
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