Lumen Technologies, Inc. LUMN has partnered with Meta Platforms, Inc. META to elevate the latter’s network capabilities. The expanded network will deliver a dedicated interconnection for Meta's cutting-edge infrastructure.

Lumen’s Private Connectivity Fabric (PCF) is designed to supply the network capacity needed for artificial intelligence (AI) development. This initiative includes exclusive access to current and new fiber routes connecting data centers. Lumen highlighted that it will help Meta deliver a seamless and flexible network to meet the growing demands of its customers as they increasingly engage with AI services across its platforms.

As interest in AI rises, investing in a dependable network is essential for the future. Meta's AI tools handle complex tasks like multilingual conversations and real-time text-to-image translation, enhancing how users interact with their surroundings. The collaboration will deliver safe on-demand bandwidth to Meta, which will boost its ability to innovate in AI and deliver an improved experience for its users.

Rising AI Connectivity Demand Boosts Lumen’s Performance

The rapid rise of AI is creating significant opportunities for Lumen, driving a surge in demand for its PCF solutions. 

In July 2024, Lumen announced that it secured $5 billion in new business due to the escalating demand for AI-driven connectivity. Further, Microsoft selected Lumen to enhance its network capacity to accommodate the growing needs of its data centers, spurred by the swift expansion of AI technology. Leveraging AI-powered Lumen's PCF custom network will enhance connectivity between Microsoft’s datacenters, providing the capacity, performance and speed needed to meet rising data demands and empower people and organizations now and in the future.

As the demand for AI capabilities continues to rise, businesses across various sectors are urgently seeking fiber capacity, which is becoming increasingly valuable and, at times, scarce. The rising adoption of Lumen’s PCF solutions will enhance the company’s revenues over the long term.

Lumen Technologies, Inc. Price and Consensus

Lumen Technologies, Inc. price-consensus-chart | Lumen Technologies, Inc. Quote

Lumen expects to secure more AI deals worth $7 billion. However, increasing competition in the space can prove as an impediment to topline expansion.

Lumen’s total revenues declined 10.7% year over year to $3,268 million in the second quarter due to the negative impact of divestitures, commercial agreements and the sale of the CDN business. It also lowered its adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) guidance for 2024, with the metric expected to be $3.9-$4 billion compared with $4.1-$4.3 billion guided earlier. It expects 2025 EBITDA to be below 2024 levels owing to accretive investments.

LUMN’s ZACKS Rank & Stock Price Performance

LUMN currently carries a Zacks Rank #5 (Strong Sell). Shares of the company have skyrocketed 405.4% in the past year compared with the sub-industry’s growth of 63.1%.

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Stocks to Consider

Some better-ranked stocks from the broader technology space are Cirrus Logic, Inc. CRUS and BlackSky Technology Inc. BKSY.  BKSY presently sports a Zacks Rank #1 (Strong Buy), whereas CRUS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BlackSky Holdings is a provider of real-time geospatial intelligence and global monitoring services. It delivered an earnings surprise of 10.1%, on average, in three of the trailing four quarters. In the last reported quarter, BKSY pulled off an earnings surprise of 33.3%. 

Cirrus Logic’s performance is driven by increasing shipments in the smartphone market. Steady momentum in the laptop market and standout next-generation flagship smartphone design cushion the top line. CRUS delivered an earnings surprise of 56.6%, on average, in the trailing four quarters.

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