The stock of Lumen Technologies (NYSE: LUMN) experienced significant gains in trading on Tuesday, with a share price increase of 87.3% as of 3:15 p.m. ET, according to data from S&P Global Market Intelligence.
A press release issued by Lumen yesterday highlighted the company’s success in meeting the growing demand for fiber networks to support artificial intelligence (AI) services. Following this news, the company received an upgraded rating and higher price target from Citigroup (NYSE:C).
Lumen recently announced securing $5 billion in new business due to AI-related demand and is in discussions with existing customers for additional deals that could result in another $7 billion in sales. The company’s partnership with Microsoft to provide fiber infrastructure for its data centers underscores the importance of AI and cloud services as significant performance drivers for Lumen.
Citi analyst Michael Rollins upgraded his rating on Lumen stock from sell to neutral, citing the potential for major new fiber deals 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. Despite the positive outlook, the analyst’s new target implies a potential downside of approximately 35% given the stock’s current pricing surge.
