Shares of Lumen Technologies(NYSE: LUMN) jumped over 100% this week, according to data from S&P Global Market Intelligence. The fiber optic and communications services provider announced a partnership with Corning Incorporated that had investors incredibly bullish. Corning is reserving 10% of its fiber optic cable production for Lumen as Lumen tries to expand and take advantage of the artificial intelligence (AI) boom. As of market close on Thursday, Aug. 1, Lumen stock is up 87.6% this week.
Here's why Lumen Technologies rocketed higher this week.
Multiple partnerships in AI
On July 24, Lumen Technologies announced a partnership with Microsoft to help connect its data centers together (among other things). The AI boom requires lots of spending, and Microsoft is at the forefront of this technology. To get these AI systems to work, Microsoft needs more network infrastructure and fiber optic cables across its Azure Cloud. That's where Lumen Technologies comes in. It's partnering with Microsoft to supply better equipment and fiber cables to help grow its AI infrastructure.
This week, Lumen announced a partnership with Corning to secure at least 10% of Corning's global fiber capacity. The Microsoft partnership secures demand for Lumen's products. The Corning partnership means it will have adequate supply in a hypercompetitive market. It's no wonder that Lumen stock shot up this week. Investors are likely bullish on the prospects of these two partnerships and hope they can drive revenue and profit growth in the coming years.
The stock is still down for a reason
Lumen Technologies has struggled over the last five years. Revenue has fallen by 33%, and operating income is down from a peak of $4 billion to well under $1 billion in the last 12 months. Free cash flow has been negative, leading investors to aggressively sell Lumen stock. Even after this week's pop, shares are still down 70% in the last five years.
At a penny stock price of just $3.32, Lumen could be a high-risk, high-reward investment going forward. The company has close to $20 billion in debt and has not generated positive cash flow in recent years. However, with these two new partnerships, Lumen may be poised to make a turnaround. Keep a close eye on this one -- and don't make it your entire portfolio -- but Lumen stock could do well if these AI partnerships bear fruit.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Corning and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
