If a Bear Market Is Coming, This Growth Stock Might Be a Great Buy on the Dip

The S&P 500 (SNPINDEX: ^GSPC) is hovering near a record high, but the ongoing geopolitical tensions in the Middle East, the rising odds of an interest rate hike, and the upcoming midterm congressional elections in November could disrupt what has been an incredible (nearly) four-year bull market.

The S&P 500 is currently trading at a Shiller Cyclically Adjusted Price-to-Earnings (CAPE) ratio of 41.8, its second-highest valuation in history, behind only the dot-com bubble peak in 2000. Even if the index were to plunge into a technical bear market by suffering a 20% decline from its recent peak, it would still be expensive by historical standards.

But the broader market has always trended higher over the long term, so sell-offs can be a great opportunity for investors to scoop up bargains. One stock that could be a great buy at a discount is Corning (NYSE: GLW), which has become a key player in the global artificial intelligence (AI) data center build-out. Here's why.

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An industrial powerhouse since 1851

Corning has been one of America's leading glass manufacturers for the last 175 years. It was the main supplier of glass for Thomas Edison's original lightbulb in 1880, and today, it makes the glass for all of Apple's iPhones. But the company's biggest opportunity currently lies in manufacturing fiber-optic connectivity solutions for data centers that accelerate processing speeds for AI workloads.

The typical Nvidia NVLink 72 data center rack includes 72 graphics processing units (GPUs), 36 central processing units (CPUs), and several networking components, all connected with 2 miles of copper cables. However, there is an ongoing shift toward fiber-optic cables instead, because they can transmit data significantly faster and with greater energy efficiency.

Corning recently developed a product called Multicore Fiber (MCF), which packs four cores into a single 125-micron strand of optical fiber. This enables data center operators to achieve the same level of performance as a single-core solution with 75% fewer cables, which will be a game changer as GPU clusters grow larger over time.

Corning says when clusters expand to more than 130,000 GPUs, they will require an extra optical layer, which means adding roughly 50% more fiber content. Products like MCF will help data center operators keep costs down and maximize processing speeds.

In January, Corning announced a multiyear deal to sell $6 billion in optical connectivity solutions to Meta Platforms, and it followed that up by signing a similar deal with Amazon in June. The company will expand its optical connectivity manufacturing capacity tenfold to meet this surge in demand, and it has partnered with Nvidia to access the funding and technological support to do so.

Corning's AI-related revenue is surging

Corning generated $4.7 billion in total core revenue during the second quarter of 2026 (ended June 30), a 17% jump from the year-ago period. The optical communications segment contributed $2.1 billion and grew at a much faster rate of 32%. AI-related sales, specifically, almost doubled.

The optical communications business also produced $438 million in net income, a whopping 77% increase from the year-ago period. The soaring demand for fiber-optic data center solutions is giving Corning an unprecedented ability to dictate prices, which is significantly boosting its profit margins.

Looking ahead, Corning expects to reach a $20 billion annual revenue run rate by the end of 2026, and it believes that figure could double to $40 billion by 2030 due to AI-related demand.

Corning stock isn't cheap, but put it on your watch list

Based on Corning's adjusted (non-GAAP) trailing 12-month earnings of $2.87 per share, its stock is trading at a price-to-earnings (P/E) ratio of 51.9. Considering Nvidia -- the undisputed leader in AI semiconductor hardware -- has a P/E ratio of just 27.5, Corning certainly isn't cheap.

If Corning manages to double its annual revenue by 2030, as management's latest forecast suggests, its earnings will likely grow at a similar rate, so its stock might actually be cheap on a forward basis. However, I think the stock will struggle to deliver further upside in the near term, especially as the broader market navigates so many headwinds.

I think investors are better off waiting until Corning's valuation is at a more reasonable level. If the S&P 500 suffers a correction that pushes Corning stock down to around $100, then its P/E ratio will fall to around 34.7 (and potentially even lower with further quarterly earnings growth). That might be a more palatable level, particularly given the company's strong long-term growth prospects.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Corning, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.