We recently published a list of 10 AI Stocks on Analysts’ Radar As AI Spending Grows. In this article, we are going to take a look at where Lumen Technologies, Inc. (NYSE:LUMN) stands against other AI stocks on analysts’ radar as AI spending grows.
Money is pouring into artificial intelligence at unprecedented levels, alleviating initial concerns. Soaring investments from big tech companies, national governments, and venture capitalists come amid a technological shift from conventional large language models toward reasoning models and AI agents.
The shift follows the DeepSeek breakthrough that showed it’s possible to reduce the amount of resources needed to run large language models. While DeepSeek did cause panic by showing it could develop an AI model at a fraction of the costs of other models, the same has not stopped capital inflows into AI infrastructure.
That’s evident in the $500 billion Stargate project that promises to enhance US data center capacity. Joining the Fray is Chinese Internet giant Alibaba, which plans to invest $52 billion in AI and cloud infrastructure, an amount that is much more than what the company has spent over the past decade. Major hyperscalers plan to spend $215 billion in capital expenditures collectively in 2025 on AI data centers, affirming that the AI investment spree is alive and growing.
“I think it’s entirely possible that frontier labs need to keep pumping in staggering amounts of money in order to push the frontier forward,” says Chris Taylor, CEO of Fractional AI, a San Francisco-based startup.
Investors of all stripes, from corporates to venture capitalists, are going crazy over the widespread belief that artificial intelligence is the next big thing in technology. According to preliminary PitchBook data for the fourth quarter of 2024, AI-focused companies accounted for 50.8% of global venture capital funding in value terms, nearly doubling the share from the same quarter in 2023.
According to Bill Janeway, a venture capitalist and economist, the VC industry’s herd mentality is reflected in the concentration of investment in AI.
“This is what we see again and again, whenever any of these new technological innovations have a broad range of potential applications. But nobody knows yet [which] will prove to be sustainable on a longer basis,” Janeway said.
The investment spree comes as businesses increasingly use AI models as they learn more about their capabilities. This is causing the demand for processing power to change from training models to using them, or what the AI industry refers to as inference.
According to Tuhin Srivastava, CEO of Baseten, a company that offers AI computing resources to other businesses, this trend toward inference is already well underway. His clients include tech firms that use AI in their services and apps,
By developing ever-more-capable AI models, large AI labs at companies like OpenAI, Google, and Meta continue competing against each other. According to Tomasz Tunguz, a venture capitalist and founder of Theory Ventures, the goal is to take as much of the still-developing AI market share as possible at any cost. Therefore, demand for AI models could increase by a factor of a trillion or more on the development of AI-specific microchips that deliver efficient systems.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds in Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Close-up of a technician’s hands adjusting a communication router.
Lumen Technologies, Inc. (NYSE:LUMN)
Number of Hedge Fund Holders: 44
Lumen Technologies, Inc. (NYSE:LUMN) is a communication services company that offers integrated products and services to businesses and residential customers. The company also helps businesses leverage artificial intelligence by providing networking edge cloud security and other services that support AI processing. On February 21, Erick Luebchow of Wells Fargo upgraded the stock from an “Underweight” rating to an “Equal Weight” with a $5 price target.
Wells Fargo upgraded the stock, citing several positives for the telecom giant, including private connectivity fabric-related sales and potential for its quantum fibre unit. Growth in the fibre unit comes as the company strives to enhance network connectivity and utilization to meet the growing demand for artificial intelligence. Lumen Technologies, Inc. (NYSE:LUMN) has already inked deals worth $8.5 billion with tech giants, including Microsoft, Amazon Web Services, Meta Platforms and Google, for providing long-haul fibre to connect data centers.
Overall, LUMN ranks 7th on our list of AI stocks on analysts’ radar as AI spending grows. While we acknowledge the potential of LUMN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LUMN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.