Lumen's stock rose 46.3% on Pac-12 and Palantir $200M partnership deals

Lumen Technologies’ shares increased by 46.3% in 2025. Compared to that, the S&P 500’s gain was 16.4%. The increase was not due to improved fundamentals. A number of cooperative ventures raised interest and share values.

Things began to improve in August when Lumen signed a network-as-a-service agreement with the Pac-12 conference’s broadcasting division. The deal strengthened the stock and aided in its recovery from earlier losses.

Deals with Palantir fueled momentum.

The turning point occurred in October when Palantir and Lumen reached an agreement on a $200 million partnership. Because the transaction integrated Lumen’s technology with a significant AI software platform, investors saw it as a strong vote of confidence.

AI hardware was already gaining traction. Lumen gained an extra boost after Taiwan Semiconductor Manufacturing reported higher-than-expected fourth-quarter profits in early 2026. Strong sales of AI chips at TSMC were viewed as a sign that demand will eventually shift to Lumen’s Private Connectivity Fabric technology.

News played a major role in last year’s growth. The stock increased 46% as a result of the purchasing frenzy that followed each announcement of a new partnership. The challenge now is whether that emphasis can shift from spectacular news to assurance in consistent, long-term performance.

In 2026 so far, Lumen shares are up about 8.8%, even as the S&P 500 has been flat.

The company is laying out an ambitious plan to support that optimism. Lumen says it will add 34 million new intercity fiber miles by the end of 2028, taking its total network to 47 million miles. That would be more than double the 16.6 million miles it reported in 2025, a sweeping nationwide build-out aimed at what it sees as surging, AI-driven demand for network capacity.

Recent trading suggests investors are starting to buy into that story. When Bank of America raised its price target, the stock jumped 3.6%.

Last year’s partnerships sparked interest, but this year’s gains come from the ongoing AI infrastructure trend. Lumen’s plan to double its network shows it is positioning itself as a key piece of the AI economy. Whether this continues to work as AI development speeds up is the open question.

Despite improving finances, analysts remain apprehensive

Analysts are cautious despite improved finances. The median target sits at $7.56, below where shares have been trading. Bank of America’s higher target still came with reservations. The firm stated that the better valuation stems from balance sheet fixes, cash from selling the Consumer Fiber unit, PCF deals, and cost cuts. Better finances, not growing sales.

Lumen outlined its strategy at an Industry Analyst Forum. The company wants to be a digital networking services provider for AI. Three main goals: build the physical backbone, modernize its network, and create a connected ecosystem. Paying for all this depends on having the necessary funds. Lumen says it will have full funding by mid-2026, with debt and interest costs significantly reduced.

The test comes on February 3, 2026. That’s when Lumen reports fourth-quarter and full-year numbers. Investors will see if cost savings are showing up and whether the company can fund its $47 million-mile network expansion without compromising its fixed-up balance sheet.

Lumen’s current valuation is still predicated on its improved balance sheet and significant cost reductions. The upcoming earnings report should show the company’s capacity to go from basic financial stability to real momentum. Until then, the increase is essentially a bet on management’s ability to implement a long-term plan.

The short-term goal is easy. The key performance indicators (KPIs) must demonstrate a distinct shift from stability to growth in order to lend credibility to the AI infrastructure narrative.

The most significant concern is what happens if AI excitement fades. This year’s surge has been fueled by major trends, making it sensitive to fluctuations in overall AI sentiment. Strong news about AI hardware has helped drive the stock upward, but a lull in enthusiasm or a larger market drop may swiftly shift the tone. Market attention swings quickly, and if the AI story loses speed, Lumen’s stock may swing dramatically, regardless of how effectively the firm operates behind the scenes.

When it comes to monitoring development, two factors are crucial. By the end of 2028, 34 million additional fiber miles will be added as part of the physical build-out. Whether the infrastructure narrative is accurate will be revealed by updates on this coast-to-coast expansion. The second step is the Private Connectivity Fabric transaction flow. Although the Palantir collaboration represented a significant turning point, further expansion will necessitate a consistent flow of corporate contracts. More PCF victories would solidify Lumen’s position as crucial plumbing for the AI economy.

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