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Many employees can't afford a hefty medical bill that pops up out of the blue. But it happens. And employees who are financially stressed are understandably more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, Aflac plans help with out of pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more@aflac.com Frumarkets that's aflac.com Frumarkets
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Alibaba, the Amazon of China. Its core profits are down 84%, so why are shares trading higher? We break it down Corning now at the heart of the hyperscaler boom, we answer one listener's question on how the OG glassmaker got there. And in another sign of insatiable AI demand, one company set to go public at nearly 100 times what it made top line last year for Wednesday, May 13, it's Brew Markets Daily and I'm Ann Berry. More market details to come. But first, meet Cerebras, touted to be on the verge of the hottest IPO so far this year, with the AI chip maker on track to raise up to $4.8 billion and at a valuation of close to 50 billion. That's after its IPO order book closed roughly 20 times over subscribed today. Well, that huge demand for Cerebra shares shows just how much appetite the market has for all things AI. Right now it designs specialized AI chips built around its wafer scale ENG, a processor that packs more than 4 trillion transistors 4 trillion onto a single piece of silicon. And the company's value proposition is providing fast and cheap inference. That's the computing required to run AI models as opposed to train them faster and cheaper even than Nvidia's GPUs, which still dominate both sides of the market. Of course, today I couldn't help myself. I nerded out by going into the Cerebras IPO prospectus or on the SEC website Edgar to see what's up. I got to tell you, the vital statistics were pretty eye opening because for 2025 the company had operating losses and hit just over $500 million in revenue. It's a lot of revenue, but it does mean that Cerebras would be valued out of the gate at nearly 100 times trailing sales. And there's real concentration in those sales, a factor that led Cerebras to Cancel A prior IPO attempt in 2024. And in 2025, just two entities, both affiliated with the United Arab emirates, accounted for 86% of total revenue and the company's outlook for diversification? Well, it's OpenAI. In January, the company announced that Cerebras would add 750 megawatts of ultra low latency AI compute to OpenAI's platform. That's in a partnership through 2028 one estimated to translate into about 20 megabytes billion of spend with Cerebras. And OpenAI features heavily in this company's prospectus, by the way, from a full page quotation from Sam Altman in very very large font to a billion dollar loan provided by the maker of chat GPT to a large warrant package that could translate into OpenAI ultimately holding a 10% stake in its new chip provider. Clearly a concerted effort on Altman's part to diversify away from Nvidia. So the reason we're watching this ipo, other than its size, other than the fact that it is sizzling hot, well, it's Cerebra shares debut on the NASDAQ tomorrow under the ticker cbrs. But here's really why we are watching the result of this ipo. At least one person's view. This is my view, will signal the market's confidence right now in OpenAI's ability to step up to its very full spending plate. Because this is just a mere two weeks after headlines were filled with reports from the Wall street journal that the OpenAI C CFO Sarah Fryer, is worried that the LLM OG won't be able to fulfill expensive computing contracts just like the one with Cerebras if OpenAI's revenue growth slows down. So a bet on Cerebras is a bet on OpenAI. We're going to keep on watching. We're coming up in a moment, a spin through the headlines that are moving the markets today, including another IPO that's catching our attention and earnings out of Birkenstock. But first, this episode is brought to you by Charles Schwab Is Recency bias
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skewing your potential stock picks is attribution bias Messing with your retirement plan? Overconfidence describes our tendency to overestimate our abilities. Loss aversion helps explain why losing a dollar hurts more than gaining a dollar. Financial Decoder, an original podcast from Charles Schwab explains how these cognitive and emotional biases can affect the decisions you make about your financial life.
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Host Mark Reape, head of the Schwab center for Financial Research, and his guests offer actionable insights on what you can do to help fight over the decision making biases.
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Download the latest episode and follow@schwab.com financialdecoder or wherever you listen.
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Well, a quick look at today's markets with the major indexes mixed after this morning's hotter than expected wholesale inflation report. The Producer price index, affectionately known as the PPI, showed wholesale prices rose 6% over the past 12 months, marking the biggest increase in over three years. Well, a 7.8% jump in energy prices accounted for the vast majority of that increase. And it's just interesting that the report follows yesterday's Consumer Price Index reading, which also showed rising inflation, largely being driven by higher energy costs. All of this continuing to raise questions around what the Fed will do with rates. The opening salvo of the newly confirmed as of today, incoming chair Kevin Wash. Well, in a moment, we answer one listener's question about Corning Glass, with its stock up as much as 5% today alone. But first, let's take a quick spin through some other companies that are making
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headlines, starting with Rent the Runway ticker R E N T shares dipped over 5% today after the company announced a leadership shakeup. The fashion retailer said its co founder, Jennifer Hyman will step down as CEO after 17 years at the helm. Terry Barry quit, current board member, and Nordstrom's former chief merchandising officer will take over on an interim basis.
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Well, Hyman isn't disappearing entirely. She will stay on as an advisor through January 2027. But there was just one thing that we did catch, did catch our attention, that announcement. Jennifer Hyman is also stepping down from the board. Now this caught my attention because typically you see when a CEO who's been around for as long as Jennifer has and has been so important in the founder story here, typically they'll step down from the CEO role but stay on the board. And in lots of cases we've seen them stay on as executive chairman or in this case, chairwoman. So the fact disappearing from the board completely does raise a question over whether this was in fact a voluntary departure. Well, in the same announcement, Rent the Runway reaffirmed itself full year guidance from April. That was good news for investors. Well, sticking with fashion, assuming you find these shoes fashionable, shares in German sandal maker Birkenstock ticker Birk shed more than 13% today after reporting a second consecutive quarter that missed on both sales and operating profit.
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Birkenstock makes the majority of its shoes in Germany, and among other factors, the company cited US tariffs as contributing to the company's 11% decline in operating profit for the quarter. One highlight sales in the Asia Pacific region were up 22% and Birkenstock kept its full year forecast unchanged. Nonetheless, Birkenstock shares are down nearly 40% in the last 12 months.
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Well, it's the second ugly shoe company. That's my name for it, nobody else's to report this earnings season with Crocs having beaten analyst estimates, raising its full year 2026 outlook and also seeing strong international growth. And that was despite a slight decline in consolidated revenue. Crocs though stock down nearly 3% over past month and down rather like Birkenstock over the past year though by not as much. Its stock having dropped just 19%, relatively small in comparison while pivoting over to tech earnings. Shares in Alibaba, that's ticker BABA, gaining almost 8% after it reported earnings today. Now that was despite an 84% year over year drop in adjusted EBITDA, a measure of profit. Well, Alibaba is frequently called the Amazon of China because it dominates Chinese e commerce and also has a massive cloud computing segment. As such, executives defended the drop in profit, saying that it stemmed from long term investments in AI infrastructure, with CEO Eddie Wu calling the turn on investment in the next three to five years, quote, extremely clear. That being said, I haven't seen the numbers. Now, while profitability dropped, cloud computing was a bright spot. Revenue in the quarter grew 38% driven
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by AI demand, very similar to Amazon's Playbook with its cloud service aws. And finally, as we wait for Cerebras, another IPO caught our attention today as Fervo Energy started trading on the nasdaq. The Houston based company uses fracking technology pioneered by the oil and gas industry to find pockets of underground heat that can then be converted to energy. On its first day of trading, shares in Fervo ticker FRVO hit $37 compared to the initial public offering price of 27 bucks, giving the Bill Gates and Google backed company a market value of over $7 billion.
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There's got to be a spin off of Landman somewhere in that story. Well, a clear investors have a strong appetite for energy companies coming out of that story, of course, amid record amounts of new power demand. Well, let's take a quick break and when we come back, the company that created Pyrex baking dishes is now inking billion dollar deals with the likes of Nvidia, Meta and Apple. We dig into Corning. This episode is brought to you by Charles Schwab. Overconfidence, loss aversion, recency, bias could attribution bias be messing with your retirement Plan Financial an original podcast from Charles Schwab explains how these pesky biases can affect the decisions you make about your financial life. Host Mark Reape, head of the Schwab center for Financial Research, and his guests offer practical strategies on what you can do to help beat back these decision making biases. Download the latest episode and follow@schwab.com financialdecoda orever.
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this week we received a comment on the Brew Markets YouTube page from a listener named Ellis who asked if we could quote, delve into Corning. Well, we were super excited to get this suggestion because in the run up to America's 250th birthday, we're particularly excited to talk about companies that have been around for a really long time and part of that history. Now Corning is 175 years old, so it's right on up there, and it's made a series of major glass related tech innovations over the course of time. But it's the company's sudden position at the center of the AI build that has sent its shares up over 131% this year and over 325% over the past 12 months. Pretty good for a heavy manufacturing company. But we'll get to the new data center innovations and partnerships fueling those gains in just a moment. But John, kick us off with a brief overview. If you can be brief with a company that's been around for more than
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a century, 175 years. I'll try to be brief. Corning Incorporated, market cap of $175 billion. The company has about 55,000 employees worldwide, yet curiously still headquartered in Corning, New York, which is not a small city ticker GLW on the New York Stock Exchange. And that GLW stands for Glassworks. And what are those glass products? Well, over the years and the first glass was made by Corning for Thomas Edison.
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That's amazing.
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Electric.
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That's an amazing factoid.
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That's a great one. They also manufacture cathode ray tubes for television sets. So that Next tech.
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I remember those. Do you remember Cathode Ray?
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Oh sure.
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For those of you don't remember, these are not flat screens. They've got huge great boxy areas at the back that all the sort of paraphernalias.
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An 80 pound piece of furniture.
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Yes, exactly, exactly.
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And then in the 1970s, this is very important, they invented the low loss fiber optic cables that spurred decades of telecom advancements. And more recently their ultra tough gorilla glass was pivotal for creating touch screens for smartphones and tablets. And that glass is currently on billions of devices worldwide. Of course, Corning is also a household name with its Corningware, that white glass ceramic dish with the signature blue corn flour on it. I don't know if you grew up with that. It was definitely in my grandparents house in their kitchen. So a lot of the headlines we've been seeing, Ann, have been saying, oh, how did this Pyrex maker or the maker of these dishes end up being in the middle of the AI trademark? But really the company has been innovating for decades. And especially that fiber optic innovation they made in the 1970s is still the AI story here today.
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And if you actually go back before the 1970s, you go to the 1930s, I think that there was an initial use that was almost found accidentally for some of Corning's products in ballistic missiles. So it's also got a history in tech defense, which is sort of interesting.
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Yes, that's right. The scientists that created that Pyrex was trying to create a ceramic dish that could withstand high temperatures in the oven and they ended up using it on missiles and missiles.
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There we go. Well, Corning did invent long range fiber optic communication components in the form of the glass that goes inside those. And it's manufactured millions of miles of those cables that connect racks now in AI data centers. So it's literally at the heart of all of this data center build out we've been talking about. And the newest innovation is the integration of fiber optics actually inside the racks, which is sort of amazing to think about. Last week Corning announced a partnership with Nvidia, which gives Nvidia the right to invest up to $3.2 billion in the company and specifically to develop three manufacturing facilities in North Carolina and Texas dedicated entirely to this new optical tech. I mean, it's a pretty amazing outcome here. It will increase Corning's US optical manufacturing capacity tenfold and create 3,000 jobs again, that sort of made in America US based manufacturing.
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Yes, we're going to keep coming back to this in that in this conversation. And so I nerded out today.
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Welcome to the world of nerding out.
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Thank you.
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I'm so happy it's a happy place.
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I wasn't on Edgar, but I was looking at Nvidia's AI server rack system, the Vero Rubin. We've talked about that on the show and that's the current state of the art. And it has within its system, this is the series of chips in the AI system, 5,000 copper cables. Well, Nvidia didn't provide specifics on this. What new product is going to be developed with Corning? The expectations are that copper will be replaced with glass fiber, which is called co pact optics. And so it's not just about connecting systems, it's physically locating the optics on the chips.
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Well, the move wasn't entirely surprising because last year at Nvidia's GPU technology conference, the Nvidia CEO Jensen Huang called co packaged optics essential for the AI build out. Jensen Huang's very good teasing these things breadcrumbing so we could find out when the big unveil is coming. And the idea here is that optical fiber allows for less signal loss than copper. That's number one. And then number two, it also uses less energy. So there's sort of double whammy, whammy benefits coming out of this partnership.
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Yeah, for some numbers, moving photons, that's essentially light uses between 5 and 20 times less power than moving electrons through the copper. Corning CEO Wendell Weeks recently said as power becomes a bigger and bigger issue, fiber inevitably gets closer and closer to the compute. As the number of GPUs in the server climbs into the hundreds, fiber optics becomes much more economical and much more power efficient.
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So I'm going to talk about power efficiency, but can I just take a beat to focus on the name of the Corning CEO, Wendell Weeks? Isn't that the perfect name for a company that's been around for 175?
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Absolutely. And online he uses his middle initial too. So I think it's Wendell P. Weeks.
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Oh, that's amazing. It rolls off the tongue. That's brilliant. Well, I did speak last week of the Bloom Energy Chief Commercial Officer about what is actually the bottleneck when it comes to the proliferation of data centers. And he talked energy constraints and the fact that a lot of these data centers just aren't going to be able to get sufficient energy unless they look at alternative sources like that provided by Bloom Energy. And also a lot of conversation around nuclear. So trying to get more on the power grid in conjunction with building out AI infrastructure. So this whole, whole issue of power and the issue of getting fiber closer and closer to the compute is we're sort of seeing everywhere. It's a narrative across all parts of the market that's. And focused on AI at the moment.
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Absolutely. And one more word from Nvidia's Jensen Huang. Upon the announcement. He said, 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. And that's what you mentioned. Facilities in Texas, North Carolina, Kentucky. You're going to keep seeing these cities come up, these states. The hyperscalers are avoiding tariffs by doing this and securing domestic supply chains. When the announcement with, with Nvidia was made, corning shares up 12%. Nvidia stock went up 6% that day.
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Well, this is exactly what all of this AI infrastructure and sort of domestic policy driven support is supposed to be driving. This is the poster child right in video, the great American AI chip business, including the great American glassware and fiber optics business coming together. So this is, this is sort of, I've got to imagine there's a lot of victory laps being done at the White House at this point. Well, just to frame a little bit more around this, Corning is benefiting not just from Nvidia, it's been getting some great deals with some other companies too. Because in January, you may remember, John Meta announced a multi year agreement worth up to $6 billion. Again, that's with Corning to supply fiber optic cable for its AI data centers through 2030. And then as part of that deal, Corning will expand its optical cable manufacturing facility in North Carolina. And when that project's complete, Corning says it will be the largest fiber optic cable plant in the world. That announcement, to your point, sent Corning shares up 16%, its best single day performance in two decades. And then last year, and this one really seared itself into my memory because to your point about the glass on devices, Apple invested two and a half billion dollars for Corning to produce 100% of iPhone and Apple watch cover glass at Corning's Kentucky facility. So just a huge amount of localized investments coming in here.
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So we've been focusing on the fiber optics. And just to wrap up Corning, because that was a question, what's going on at Corning? Their Q1 earnings came out last month and they reported $4.3 billion in net sales, which is up 18% year over year, over half of that revenue is the optical and glass innovation segment. But just as a reminder, they're still making all that other kind of glassware they've been making. Around 5 to 10% of their business is automotive glass. They're into solar life sciences. Think lab equipment.
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But investors with long memories are probably going to be a little bit more caut. Slightly different dynamic, but there is a bit of history here. During the dot com boom we saw tons and tons of fiber optic being laid down. This was to fuel the, you know, explosive growth in the Internet and people getting online. But it sort of over, it overplayed its hand. We saw too much fiber optic ultimately getting laid down. And Corning did experience a bit of a boom and bust feature as a result of that. Feels like a slightly different dynamic here, but there are some long memories in this field. So one thing that folks may be looking out for, but look, analysts writing to make that point, quote, the market will still need TVs and phones and cars and auto glass and files for medications. A pretty articulate way of saying they're diversified. And so it's worth, you know, paying special attention to this one. You see this in the analyst recommendations. I have it right in front of me here. Of the 16 analysts covering the name on Wall street, we've got 10 having it at a buy despite this massive run up that you just said, the 350% plus run up over the last 12 months, still getting a buy by a bunch of analysts, five of them though at hold and a wait and see. One is a cell rating showing that there is still a little bit of a question mark over valuation. Well, thank you for the comment, Ellis. Look, we love to hear from listeners. We check every email, we read every comment on Spotify, on Apple, we read the comments on YouTube. So wherever it is that you listen or you watch, do get in touch because we love to break down those topics you find the most interesting. And just a reminder of our email address. It is Brew Markets show@morning brew.com that's Brew Market Show@morning brew.com. well, there it is, the closing bell, 4:00pm on the east coast and the markets wrapping up for the day. We don't have a ticker tape but we're going to throw it over as always to our human ticker. Our producer John.
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Despite an early drag from the PPI inflation data, stocks spent the day marching up. The Dow did finish down about a tenth of a percent. But the S&P 500 and Nasdaq both finished at record highs, the S&P 500 up over half a percent and the NASDAQ up 1.2% for the day.
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Well, it is still earnings season, so we are still brewing that cup of coffee or our cups of tea to make sure we keep up with it through the evening. That's it for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Berry, produced by John Curto, Taka Delatif, Aveni Laroya and Emily Millard. Our technical director is Uchena Wa? Ogu, audio engineering by Brittany de Taco and the president of Morning Brew Inc. Is Devin Emery.
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Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place.
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If you can't afford childcare or can't afford to take a sick day, that's not just your bad luck, it's actually bad for our economy. I'm Katherine Ann Edwards, an economist, and I'm editor Robyn Rousey. On our podcast Optimist Economy, I break down how our lives intersect with the economy, whether it's wages, Social Security, the national debt. And I ask the questions that you're actually thinking like, like, is AI going to take my job? Americans deserve a better economy than the one we have, so let's talk about how to get there. Every Tuesday on Optimist Economy. Wherever you listen to podcasts.