Lumen (LUMN 7.07%) stock is climbing higher in Wednesday's trading, thanks to favorable demand indicators and momentum for the broader market. The telecommunications technologies company's share price was up 6.8% as of 2:45 p.m. ET. At the same point in time, the S&P 500 (^GSPC 1.40%) was up 1.1%, and the Nasdaq Composite (^IXIC 1.72%) was up 1.3%.
Lumen's valuation is climbing higher thanks to signs of continued artificial intelligence (AI) investments from Microsoft and Meta Platforms. The two U.S. tech giants are purchasers of Lumen's Private Connectivity Fabric networking solutions, and they've quickly become central to Lumen's turnaround story and stock rebound.
Despite recent concerns that spending on AI infrastructure and software development could begin to moderate in the not-too-distant future, Microsoft and Meta appear to be moving forward with aggressive expansion plans in the categories. That's seemingly good news for Lumen.
Microsoft and Meta are both gearing up to launch new agentic AI offerings for businesses. These tools could help customers automate elements of sales, marketing, customer service, and a wide range of other tasks. Training, debuting, and scaling these new software offerings will require expanded data center footprints, suggesting a favorable demand tailwind for the telecom company.
Last year, Lumen signed deals to provide its Private Connectivity Fabric custom network solutions to Microsoft and Meta. The service provides the tech giants with dedicated access to Lumen's fiber communications network and related digital services and is tailored for AI-focused data centers. Rising demand for high-performance fiber networks to support data centers has given Lumen meaningful exposure to key artificial intelligence trends and helped shift the narrative surrounding the stock, despite the company's large debt load and deterioration in other areas of its business.
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