Shares of Lumen Technologies (LUMN +3.11%) got a huge boost today from another company's earnings report. Corning (GLW 0.53%) announced that it's selling 10% of its fiber capacity for the next two years to Lumen, and investors loved the news.
Shares jumped as much as 77.3% in parabolic trading mid-day before falling back to close the day up 38%.
NYSE: LUMN
Key Data Points
Lumen's Corning deal
Last week, Lumen announced that it has partnered with Microsoft (MSFT 1.57%) to "enable digital transformation" of the company's infrastructure. That will include access to Lumen's fiber network, as well as adding new fiber on new and existing routes.
The idea is to build faster connections between data centers, a key to artificial intelligence advances like building larger and more complex models.
While no terms were announced, investors are seeing this as a new winner in the battle for AI resources.
Volatility and short-term wins
Part of the bounce higher today may have simply been a delayed reaction to the Microsoft news and solidification of the Corning supply deal. That then may have caused a short squeeze, given that 13.9% of shares outstanding had been sold short. But that bounce faded quickly.
The main caution with Lumen Technologies is the fact that the company's revenue is falling and it's losing money quickly. This could be a turnaround play, but it may also be a great headline with little fundamental improvement to back it up. That's too much risk for me today.
