Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [5]. Core Insights - The company reported a significant increase in revenue and net profit for Q3 2025, driven by the demand for optical modules amid the AI wave, with Q3 revenue reaching 10.216 billion yuan, up 56.83% year-on-year and 25.89% quarter-on-quarter [2][3]. - The gross margin for Q3 2025 improved to 42.79%, reflecting a year-on-year increase of 9.2 percentage points, attributed to the ramp-up in silicon photonic module production and the release of 1.6T high-speed optical modules [3]. - The company is well-positioned to benefit from the ongoing capital expenditure increases by major North American tech firms, which is expected to support demand for optical modules [4]. Summary by Sections Performance Review - For the first three quarters of 2025, the company achieved a revenue of 25.005 billion yuan, a year-on-year growth of 44.43%, and a net profit of 7.132 billion yuan, up 90.05% [2]. Operational Analysis - The increase in revenue and profit in Q3 2025 is largely due to the rising demand for optical modules from downstream customers, particularly in the context of AI developments [3]. - The company’s inventory reached 10.9 billion yuan in Q3 2025, reflecting a 1.7 billion yuan increase from the previous quarter, primarily due to preparations for production [3]. Market Outlook - The ongoing acceleration of AI infrastructure investments by major North American companies, such as Google and Meta, is expected to provide substantial demand support for the company’s products [4]. - The report anticipates that the market share of optical modules in scale-up networks could reach 21% by 2030, indicating significant growth potential for the company [4]. Financial Forecast - Revenue projections for 2025-2027 are 34.578 billion yuan, 112.187 billion yuan, and 167.843 billion yuan, respectively, with expected growth rates of 45%, 224%, and 50% [5]. - The estimated EPS for the same period is 8.79 yuan, 34.18 yuan, and 51.52 yuan, with corresponding P/E ratios of 37, 10, and 6 [5].

Investment Rating - The investment rating for the industry is "Positive" and is maintained [6]. Core Insights - Corning's optical communication business has shown strong growth, driven by both enterprise and carrier networks, with enterprise network revenue increasing by 81% year-on-year due to AI data center construction [2][9]. - The commercialization of data center interconnect (DCI) solutions has begun, with expectations to grow into a $1 billion business in the coming years [2][9]. - The "scale-up" trend is advancing, with the OIO optical interconnect solution expected to unlock 2-3 times the growth potential in the enterprise network market [2][9]. - The demand for multimode fiber is robust, with profitability exceeding that of single-mode fiber [2][9]. Summary by Sections Financial Performance - In Q2 2025, Corning reported GAAP sales revenue of $3.86 billion, a year-on-year increase of 19%, and a net profit of $470 million, up 351% year-on-year. On a core (non-GAAP) basis, sales revenue was $4.05 billion, a 12% increase year-on-year, with a net profit of $520 million, up 29% year-on-year [4][9]. Business Segments - The optical communication business generated $1.57 billion in revenue, a 41% year-on-year increase, with a net profit of $250 million, reflecting a 73% year-on-year increase [9]. - The enterprise network segment achieved $769 million in revenue, marking an 81% year-on-year growth, while the carrier network segment generated $797 million, a 16% year-on-year increase [9]. Market Trends - The current growth in enterprise networks is primarily driven by "scale-out" deployments, while future growth opportunities are expected to arise from "scale-up" scenarios, which involve deploying more GPUs within a single node [9]. - The transition to OIO solutions is anticipated to significantly enhance data center interconnect architectures, potentially expanding the current $2 billion enterprise network market [9]. Investment Recommendations - The report suggests focusing on companies with a high proportion of data communication business, such as Longi Fiber, FiberHome, and others involved in fiber optic cables, connectors, and OIO optical engines [2][9].