Nvidia (NASDAQ:NVDA | NVDA Price Prediction) has been on quite the investment spree in the past year, and while much of the AI bets and partnerships have begun to bear fruit after the latest run in AI-related names, questions linger as to how all these “circular” bets change the risk/reward profile of the world’s largest company.
Undoubtedly, if there’s anyone who knows opportunity in the AI space, it’s Jensen Huang, who continues to demonstrate that he’s a step or maybe several steps ahead of just about anyone else. But just because some of Nvidia’s recent investments have been rewarded with early gains (think Coherent (NASDAQ:COHR), which is up more than 40% in the past three months) doesn’t mean that the Nvidia-backed companies will be standing tall and marching higher in two to three years from now, especially at today’s seemingly lofty valuations.
Either way, I do think having a Jensen premium is a big deal, as growth investors try to spot the next big growth opportunities within the AI scene. Indeed, some of the best hyper-growth kinds of plays on AI are lesser known, typically with market caps far south of $100 billion. Of course, given the pace of the gains seen across the space, it doesn’t take all too long before firms rise up the market cap rankings from seemingly out of nowhere.
Corning stock might still be an AI sleeper
In any case, Corning (NYSE:GLW) stands out as an AI sleeper stock that got the ultimate vote of confidence when it won a strategic investment from Nvidia, granting it warrants to invest in up to $3.2 billion worth of equity.
It’s not just the skin in the game for Nvidia that’s most compelling, but the nature of the long-term partnership in place, which should have investors watching Corning as Nvidia looks to further expand its reach into the world of optical connectivity, a corner of AI infrastructure where the puck might be headed next. Corning is tackling a rather expensive undertaking as it builds three new facilities dedicated to producing for the GPU giant.
While Corning isn’t flying under the radar anymore after gaining just shy of 400% in two years, I still think the now-$151 billion firm is just starting to get appreciation as AI data centers look to get up to speed in the physical layer. In my view, Nvidia’s big bets on optical connectivity players aren’t so much of a bet on undervaluation in the shares, but as a means to get that AI flywheel really going.
The AI flywheel could spin that much faster after the Nvidia-Corning partnership
More advanced optical connectivity could mean more GPUs sold and a steeper curve as the AI revolution advances further. In other words, giving Corning that boost could help raise the tide, lifting all boats that much faster. Given the structure of the deal, Nvidia might just happen to land a brilliant investment. At the same time, Corning is no longer a secret, especially after the parabolic gains posted in 2025.
The big question here is whether more firms will seek to land deals with Corning to get AI infrastructure where it needs to be, as the latest and greatest data centers look to move beyond copper. At 58.8 times forward price-to-earnings (P/E), shares of Corning seem priced for perfection.
It could be a hyper-volatile name over the near term based on Mr. Market’s mood, which could change suddenly and for no real good reason, but the way Nvidia’s deal is structured, the firm is positioned to win massively on the upside if we’ve yet to see the peak in the name. Given the question marks surrounding the stock, I’d argue that warrants are a very smart way to go.
In my humble opinion, I think prospective partners have every reason to give Nvidia a sweet deal, given the expertise it brings to the table, which is arguably just as valuable as the capital it brings to the table. As circular as some of the deals may be, I think it’s hard to argue against the asymmetrical upside Nvidia might be positioning itself for as the AI boom continues onward.
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