Why Lumen Technologies Stock Mashed the Market on Monday

Key Points

• The telecom is busy wiring this country with strands of fiber optic cable.

• It aims to build this out aggressively in the coming years.

• 10 stocks we like better than Lumen Technologies ›

Lumen Technologies (NYSE: LUMN) saw a very healthy bounce in its stock price on Monday, following the telecom company's latest operational update. Investors enthusiastically traded the tech and telecom stock up by 9% in reaction to the news, a figure that was more than good enough to beat the 0.4% rise of the S&P 500 (SNPINDEX: ^GSPC).

Powered by fiber

That morning, Lumen announced that so far this year, it's added over 2.2 million new intercity miles to its existing fiber-optic network. This is a technology that allows for much faster data transmission speeds than more traditional methods. At such a pace, the company expects to have 16.6 million intercity fiber miles by the end of this year.

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Image source: Getty Images.

Ultimately, the telecom's goal is to wire America with 47 million intercity fiber miles by the end of 2028, which counts on a continued and rather aggressive build-out schedule. This is a foundational aim of its broader Big Build program.

Fiber is appropriate for our modern age, as it can handle the vast chunks of data required to power artificial intelligence (AI) functionalities.

Lumen quoted its executive vice president of enterprise operations Kye Prigg as saying, "AI is fueling a surge in network demand like we've never seen, and Lumen is building the backbone to meet it."

A good-looking play on AI

Recently, many investors have cooled on the stocks most closely identified with the Great AI Boom. Currently, they're looking for less obvious plays in companies that should benefit from the increased resource needs of the technology, and Lumen fits the bill. Assuming its fiber rollout goes at least close to plan, the company's stock should stay in the good graces of the market.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.