The stock of Lumen Technologies (NYSE: LUMN) posted explosive gains in Tuesday trading. The company’s stock price was up 87.3% as of 3:15 p.m. ET today, according to data from S&P Global Markets Insights.
In a press release issued yesterday, Lumen showed that it is benefiting from the demand for fiber optic networks to support artificial intelligence (AI) services. Following this news, the stock received a rating upgrade and an increase in its price target of Citigroup.
Lumen Wins Victories with AI
The company announced yesterday that it has won $5 billion in new contracts thanks to AI-related demand. It also said it is in talks with existing customers about additional deals that could generate an additional $7 billion in sales.
The company recently entered into an agreement to provide fibre optic infrastructure to support MicrosoftLumen has announced plans to double the size of its intercity network over the next five years, and management expects its ability to provide AI-enabled infrastructure to its partners will only begin to unlock long-term opportunities.
An analyst upgrade, but there’s a catch
Following the announcement and forecast, Citi analyst Michael Rollins upgraded his rating on Lumen’s stock to neutral from sell. He believes that new major fiber-optic deals will give the company the flexibility to reduce debt, improve earnings and create spinoff opportunities.
Rollins also raised his one-year price target to $3.15 per share from $1.25. But given the price rally the stock has already seen today, the analyst’s new target actually suggests a potential downside of about 35%.
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has a position in Microsoft and recommends Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a position in Microsoft and recommends Microsoft. disclosure policy.
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