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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Lumen Technologies up 44% in US pre-market as shares extend AI rally 📈

10:34 7 August 2024

Lumen Technologies extends a rally, up more than 500% since the beginning of July and another 44% in today pre-market, as Wall Street bets on AI catalyst on company business. The company’s CEO, Kate Johnson, commented that the company ‘is confident in future growth and business transformation, looking to enable AI economy’. During last few sessions we can see that company 'repricing process' accelerates with shares rising 90% in last 5 sessions and 371% since July 7. 

  • Now Wall Street expects that rising demand for AI, requiring connectivity between data centres and Lumen’s network as well as forward-thinking digital services, is positioning the company as a one of AI winners. 
  • The announced partnership with cloud giant, Microsoft Azure (Lumen will be its fiber  infrastructure provider) was seen as a ‘proof’ of that. Companies have to rise CAPEX, boosting demand for some hardware companies producers, and Lumen may benefit from that in the long term.
  • According to the Lumen statement, 'companies across industry sectors are seeking to secure fiber capacity quickly, as this resource becomes increasingly valuable and potentially limited, due to booming AI needs.'
  • Lumen expects that it will at least double its intercity network miles over the next 5 years, providing access to a significant amount of installed dark fiber. The company secured an agreement with Corning to be its preferred partner for next-generation fiber-dense cable, which will help accommodate the increased data processing that AI requires.
  • The Company secured $5 billion in completely new deals, and is now in talks which may end with another $7 billion. As for now, Lumen Technologies market cap is $5.5 billion; Citigroup upgraded the stock rating to neutral, as markets expect rising fiber networks deals. Analysts cited profitability, spin-offs and debt unload as main stock drivers.

However, Q2 2024 for the company was overall weak, so current valuation is based on projections of future revenue growth and profitability. The company historically had long periods of negative net margins, hitting all-time lows zone, this summer. Today, Lumen’s shares gain 44% to $7.25 per share, one step closer to SMA200 on the weekly interval. Some investors are seeing AI as the unprecedented company business catalyst.

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Source: xStation5

Source: xStation5

Lumen Financial dashboards

The company business was far from expansion during last years and quarters, with negative net income and falling revenues. However, fiber market deals may transform the company  business over the long term. A deal with Microsoft signal that the AI market, in which Lumen operates, is quite narrow and partnership may bring higher sales attention to the company.

Source: XTB Research, Bloomberg Finance L.P.

 

Source: XTB Research, Bloomberg Finance L.P.

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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