Can Corning-Broadcom Deal Transform AI's Data Center Future?

Corning Inc GLW on Tuesday announced a collaboration with Broadcom Inc AVGO on a co-packaged optics (CPO) infrastructure that will significantly increase processing capacity within data centers.

Corning will supply advanced optical components for Broadcom’s Bailly CPO system, making it ideal for large-scale artificial intelligence (AI) clusters.

CPO infrastructure is meeting the needs of AI workloads by improving networking and processing bandwidth, density, and power efficiency inside data centers by placing optics and electronics closer together in a processing system.

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Broadcom’s Bailly CPO system incorporates eight silicon photonics-based, 6.4 TBps optical engines co-packaged with Broadcom’s StrataXGS Tomahawk 5 Ethernet switch chip.

Corning is now a qualified supplier of the optical infrastructure needed to connect fibers to these optical engines.

Broadcom stock gained 66% in the last 12 months, backed by the artificial intelligence frenzy.

BofA Securities analyst Vivek Arya continues to view the demand for AI computing as healthy, and the ongoing shift toward compute-hungry test-time computing and reasoning models should further help.

He highlighted that capex from non-CSPs, including emerging cloud vendors, enterprises, and national AI infrastructure projects, could be an additional source of sustaining AI investments, filling more than any demand gap despite concerns that AI data center buildouts might peak in 2025 and considerably slow down afterward.

The analyst’s top AI picks remain Nvidia Corp NVDA and Broadcom, respectively, as merchant and custom AI silicon leaders.

Price Actions: AVGO stock is up 3.3% at $228.92 at the last check on Tuesday. GLW is up 1.7% at $47.76.

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