By Elsa Ohlen
Telecommunications company and broadband provider Lumen Technologies saw its stock price almost double on Tuesday as it secured new deals for its high-capacity fiber networks. One analyst said peers could see a similar boost from Big Tech companies investing heavily in artificial intelligence.
"We believe other carriers are getting some incremental business from the AI hyperscalers in addition to what they are spending with Lumen," wrote Raymond James analyst Frank G. Louthan. The most direct beneficiaries would be Lumen rival Uniti and construction firm Dycom, Louthan said.
Lumen on Tuesday said it had secured $5 billion in new deals from companies including Microsoft, which last quarter spent almost $14 billion in capex, mostly on AI investments. Lumen also said it was in active discussions with other customers to secure an additional $7 billion in sales as it's seeing strong demand for its fiber, which enables secure digital connections for data centers.
Luthen pointed out that these $7 billion in potential bookings appear aspirational, but could increase competitiveness for the business overall. "If AI customers are not just using [Lumen] for its unique network elements (such as its legacy spare conduits), the competition for other parts of these builds could increase," he wrote.
Lumen stock was up 27% Wednesday, while the benchmark S&P 500 index was up 1.2%. Including Tuesday's gain, Lumen's stock price has risen over 375% over the past month.
Uniti shares rose 3% on Wednesday, after rising 12.2% on Tuesday. Dycom also edged 0.2% higher, after gaining 7.3% the previous session.
Write to Elsa Ohlen at elsa.ohlen@barrons.com
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(END) Dow Jones Newswires
August 07, 2024 10:39 ET (14:39 GMT)
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