12 Best Telecom Stocks To Invest In Now

7. Lumen Technologies Inc. (NYSE:LUMN)

Number of Hedge Fund Holders: 26

Lumen Technologies Inc. (NYSE:LUMN) is a leading technology and communications provider that offers a range of services, including fiber, cloud, edge computing, security, and networking solutions to businesses and consumers worldwide. Operating through its Lumen, Quantum Fiber, and CenturyLink brands, the company delivers high-speed internet, voice services, and a suite of digital solutions.

The company is now prioritizing building the essential infrastructure for the growing AI sector to fuel the telecom business, which involves utilizing its existing fiber network infrastructure to connect data centers and support the massive data transfer needs of AI applications.

It’s actively securing large-scale private connectivity fiber (PCF) deals with major technology companies like Microsoft, Meta, AWS, and Google. These deals involve building dedicated fiber connections between data centers to facilitate high-bandwidth, low-latency data transfer. The company has recently secured over $3 billion in incremental PCF deals, bringing the total to over $8 billion since June.

Its strategy is based on the understanding that AI applications require vast amounts of data to be processed and analyzed. By positioning itself as a key enabler of the AI revolution, Lumen Technologies Inc. (NYSE:LUMN) aims to capitalize on the growth potential in this market.

Third Point Management stated the following regarding Lumen Technologies, Inc. (NYSE:LUMN) in its Q3 2024 investor letter:

“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. First, Lumen Technologies, Inc. (NYSE:LUMN) announced that its Level 3 (LVLT) subsidiary was doing a fiber infrastructure build to support AI growth. Our aversion to secular decline (most of LUMN is melting copper infrastructure) kept us out of the situation but the AI fairy dust resulted in a massive rerating of LUMN debt and equity. These higher security prices in turn facilitated several moves to refinance portions of the capital structure and extend the runway.”