Nvidia, Corning partner on massive optical fiber deal that may be a game changer for AI

Nvidia, the chipmaker at the center of the artificial intelligence boom, is partnering with glassmaker Corning for three new advanced manufacturing facilities in North Carolina and Texas dedicated entirely to optical technologies for the world's most valuable semiconductor company.

The factories will lead to the creation of at least 3,000 jobs and increase Corning's U.S. optical manufacturing capacity by 10-fold, the companies said in a joint press release on Wednesday.

Financial terms weren't disclosed. Corning shares soared 17% on the news. Nvidia stock gained about 2%.

The deal gives Nvidia the right to invest up to $2.7 billion in Corning. Nvidia is getting warrants to buy up to 15 million shares of Corning common stock at an exercise price of $180 per share, above Tuesday's closing price of $162.10 but below the price after the pop.

In addition, Nvidia has a pre-funded warrant to buy up to 3 million shares of Corning common stock at an exercise price of $0.0001 per share, for an aggregate purchase price of $500 million.

The multiyear deal brings together two infrastructure players that have seen their fortunes skyrocket since the launch in 2022 of OpenAI's ChatGPT, which sparked an explosion of investments into new processors and systems for powering cutting-edge AI models and workloads. While the two companies didn't provide specifics about what's being developed, Nvidia is likely gearing up to replace copper with Corning's optical glass fibers in its AI rack-scale systems, an integration known as co-packaged optics.

At Nvidia's GTC conference in 2025, Nvidia CEO Jensen Huang called co-packaged optics essential for the AI buildout.

"What Nvidia is doing is nothing short of extraordinary, not just for the future of AI, but for the American advanced manufacturing workforce," Corning CEO Wendell Weeks said in a press release.

Corning's stock is up over 250% in the past year as of Tuesday's close, driven by the 175-year-old company's rapid pivot into the new economy. In January, Meta announced it would spend up to $6 billion as the flagship customer helping Corning build out its optical cable plant in Hickory, North Carolina, an expansion that's expected to create around 1,000 jobs.

Nvidia cemented its position in the AI market much earlier, as its graphics processing units are key to the development of large language models and for giving tech giants like Alphabet and Meta the ability to massively scale up their data centers. Nvidia's stock price has climbed roughly 14-fold in the past five years, but the rally has slowed of late as investors have spread their bets across the wider swath of AI infrastructure companies, backing chipmaker Intel and memory provider Micron, as well as Corning.

Analysts have long awaited Nvidia's large-scale deployment of co-packaged optics because the technology promises to vastly increase the speed of data transfers and lower the energy needs for AI workloads.

Corning is well known for making all the display glass for Apple's iPhone, but optical communications remains its largest and fastest-growing business. Since inventing optical fiber for long-range communication in 1970, Corning has provided millions of miles of cables to connect racks together in AI data centers from all the major players.

By partnering with Nvidia, Corning could be bringing glass fiber between the chips themselves, eventually replacing the 5,000 copper cables inside its rack-scale systems like Vera Rubin.

Fiber-optic cables are tiny, bendable strands of glass that allow data to pass through as photons at far higher speeds and with less energy than what's used by traditional copper wires.

"Moving photons is between five and 20 times lower power usage than moving electrons," Weeks told CNBC in an interview in January.

"You're bringing the light conversion process right next to the computer chip," said Vlad Galabov, who covers enterprise infrastructure at research firm Omdia. "Less power is wasted because now you're traveling a few millimeters, which requires far less energy than traveling across the circuit board."

Galabov added that "Nvidia has pushed the entire ecosystem to innovate faster."

Optical fiber also allows for less signal loss than copper, speeding up reliable communication and shortening the distance needed between the hundreds of thousands of GPUs in a data center.

"AI is driving the largest infrastructure buildout of our time — and a once-in-a-generation opportunity to reinvigorate American manufacturing and supply chains," Nvidia's Huang said in the press release. "

"Together with Corning, we are inventing the future of computing with advanced optical technologies —building the foundation for AI infrastructure where intelligence moves at the speed of light while advancing the proud tradition of Made in America."

Nvidia released two network switches in 2025 that utilize similar technologies, positioning them right next to the primary AI chips. Competitors Broadcom and Marvell have introduced similar products, while Intel is also developing co-packaged optics solutions.

In March, Nvidia invested $4 billion in two companies — Coherent and Lumentum — that develop the lasers and components that help convert data between light and electrical signals, which are then carried through Corning's fiber-optic cables.

Weeks told CNBC during an exclusive factory tour in January that he was working with "all the different chip folks on glass core and how glass will be part of semiconductor packaging going forward."

"As power becomes a bigger and bigger issue, fiber inevitably gets closer and closer to the compute," Weeks said. As the number of GPUs in a server climbs into the hundreds, he added, "the distances will climb, and when those distances climb up, fiber optics become much more economical and much more power efficient."

Corning is hosting an investor day at the New York Stock Exchange on Wednesday, a day before celebrating its 175th anniversary by ringing the closing bell.

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