We recently compiled a list of the 12 Best Artificial Intelligence Stocks Under $50 According to Analysts. In this article, we are going to take a look at where Corning Inc. (NYSE:GLW) stands against the other AI stocks under $50.
Franklin Mutual’s Katrina Dudley appeared on CNBC on December 31 to discuss whether the sectors that powered the market’s gains in 2024 will continue to lead the way in 2025, particularly AI within the tech and communications sectors. Companies in these sectors, especially the MAG7 stocks, have experienced remarkable performance over the past year. She pointed out that alongside traditional tech stocks, companies providing essential infrastructure are crucial for supporting the rapid expansion of AI technologies. She expressed strong optimism about AI’s continued influence, stating that it represents a secular theme likely to propel the tech sector forward in the coming year.
When addressing concerns about market valuations, Dudley reiterated that high valuations, such as the S&P 500 trading at ~22 times earnings, should not deter investors. Instead, she argued that these valuations reflect robust earnings growth among technology companies, distinguishing this phase from past market bubbles. The network effects inherent in AI-driven companies contribute to their returns, suggesting that if these firms can exceed earnings expectations, their valuations could become more favorable over time. However, she cautioned that consistent performance is critical. Any failure to deliver on earnings growth could pose risks in a high-valuation environment.
Turning her attention to lagging sectors, Dudley discussed healthcare as an area ripe for AI-driven transformation. She noted that while healthcare has significant upside potential due to demographic trends, some healthcare service providers faced challenges in 2024 due to rising costs and consumer pushback against high pricing. The increased focus on transparency in healthcare pricing may benefit consumers but could complicate profitability for companies. She suggested that advancements in AI technology are enhancing productivity within pharmaceutical research and development. Although immediate benefits may not be visible, she believes that AI’s long-term impact on productivity will make healthcare an increasingly attractive sector for investment.
Dudley’s insights underscore the transformative potential of AI across both tech and healthcare sectors.
Methodology
We first sifted through internet lists to compile a list of the top AI stocks under $50. We then selected the 12 stocks with high analysts’ upside potential and that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of analysts’ upside potential (at least 10%), as of January 2. We’ve also added the hedge fund sentiment for each stock which was sourced from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician wearing protective glasses installing optical fibers and cables.
Corning Inc. (NYSE:GLW)
Share Price as of January 5: $47.50
Average Upside Potential as of January 5: 15.79%
Number of Hedge Fund Holders: 46
Corning Inc. (NYSE:GLW) is a leader in materials science and specializes in advanced optics, ceramics, and specialty glass. It enables the AI revolution through its innovative solutions, which include high-performance fiber optic cables for high-speed data transmission and advanced materials for AI-powered devices.
The company is growing due to the demand for its optical connectivity solutions, driven by the expansion of the AI market. This is evident in the 55% year-over-year growth in the company’s Enterprise segment, a direct consequence of the rising need for high-speed data transmission and seamless interconnectivity within AI-powered data centers.
Its optical connectivity solutions, such as the cutting-edge GenAI fiber and cable system, are instrumental in facilitating the high-bandwidth communication required for AI applications. The partnership with Lumen Technologies, which involves reserving 10% of Corning Inc.’s (NYSE:GLW) global fiber capacity for the next 2 years, highlights its approach to capturing the AI market. By aligning with key players, the company is positioning itself to grow within the AI-driven data center landscape.
O’keefe Stevens Advisory highlighted the company’s strong Q2 2024 driven by AI demand, suggesting its “springboard” plan could unlock significant growth and margin expansion. It stated the following regarding Corning Inc. (NYSE:GLW) in its second-quarter investor letter:
“Corning Incorporated (NYSE:GLW), another long-time holding, announced Q2 results would come in better than anticipated due to outperformance in their optical connectivity products used for Generative AI. Corning has long been a disappointing investment; with leading-edge technology, it consistently underperforms expectations. Their “springboard” plan, which revolves around $3 billion of excess capacity, seems to be the first sign in a long time that they are ready for a surge in growth. Management has frequently discussed the potential for operating leverage in nearly every conference call, anticipating a return to normal business conditions. Margins should expand over the coming quarters, driving EPS growth. The $3B in incremental sales could be worth in excess of $900m in EBITDA.”
Overall GLW ranks 7th on our list of the best AI stocks under $50 according to analysts. While we acknowledge the potential of GLW as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GLW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.