10 Best Performing Small-Cap Stocks in 2024

5. Lumen Technologies Inc. (NYSE:LUMN)

Year-to-Date Performance as of September 23: 281.42%

Market Cap as of September 23: $7.13 billion

Number of Hedge Fund Holders: 18

Lumen Technologies Inc. (NYSE:LUMN) is a telecommunications company that offers communications, network services, security, cloud solutions, voice, and managed services through its fiber optic and copper networks, as well as its data centers and cloud computing services. The goal is to provide customers with a platform to connect, protect, and compute, enabling them to achieve their digital ambitions.

The company sees the AI TAM opportunity in 3 phases. Currently, the race is for companies developing large learning algorithms. These firms need to train these algorithms quickly to be ready for the next phase when larger enterprises will start using them to run their businesses. The connectivity being acquired is to support data center builds for this training.

With over $5 billion in major partnership inked to date, Lumen Technologies Inc. (NYSE:LUMN) sees a $7 billion revenue opportunity in data center networking. AI needs data, which requires data centers and connectivity, areas where this company excels. It is well-positioned for growth due to partnerships with Microsoft and Corning. These partnerships provide network infrastructure and fiber optic cables to support Microsoft’s Azure Cloud expansion and enhance Lumen’s supply chain. These developments have recently led to a 7% increase in its stock.

Revenue in Q2 2024 was $3.27 billion, down 10.73% year-over-year, due to divestitures and commercial agreements. Mass markets segment revenue declined 8.2%. Wholesale revenue declined 10% year-over-year. North American business declined 5.5%. International and other revenue declined by 67.1%. Large enterprise revenue declined 6.9%. Notable wins include Uber and the state of New Mexico. Customer satisfaction in the company’s service delivery process also improved significantly.

Although the company faces financial challenges and high debt levels, the positive market response suggests that the successful execution of its partnerships could lead to a turnaround. If it capitalizes on these opportunities, it could see substantial revenue and profit growth, making it an appealing investment despite its risks.