Key Points
Nvidia is making another move to advance optical connectivity for AI.
Previously announced partnerships allow Nvidia to gain from this phase of AI infrastructure growth.
Nvidia will now invest in Corning as it adds optical manufacturing capacity.
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Nvidia (NASDAQ: NVDA) stock has been treading water over the last six months. Until today, that is. As of 12:23 p.m. ET, shares have jumped 4.4% today, providing nearly the entire gain the stock has realized over the past half year.
Today's move came after news that the artificial intelligence (AI) leader is partnering with glass and optical company Corning to build three new cutting-edge manufacturing plants located in North Carolina and Texas. The news is another example of Nvidia spearheading all aspects of AI infrastructure build-out, and astute Nvidia investors may have seen it coming, too.
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Optical connectivity investments
Nvidia recently announced two new partnerships that signaled optical connectivity was the next growth area of AI infrastructure. In early March, Nvidia announced strategic partnerships with both Coherent and Lumentum to advance optics technologies by increasing manufacturing capacity and research and development (R&D). Nvidia said the $2 billion investments in each company would support the next wave of AI infrastructure.
Today's new partnership with Corning will help speed up innovation in advanced optics technologies, including R&D, to facilitate next-generation AI infrastructure and system designs. The investment in Corning will allow Nvidia to once again participate in that growth.
The agreement grants Nvidia the option to invest up to $2.7 billion in Corning. Nvidia will receive warrants allowing it to purchase up to 15 million shares of Corning common stock at an exercise price of $180 per share. Additionally, Nvidia also holds a pre-funded warrant for up to 3 million shares of Corning common stock.
Nvidia CEO Jensen Huang stated, "AI is driving the largest infrastructure build-out of our time -- and a once-in-a-generation opportunity to reinvigorate American manufacturing and supply chains. 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.
Nvidia's shares are gaining today as investors want to participate in that opportunity.
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Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Coherent, Corning, Lumentum, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
