Lumen Technologies Inc. (NYSE: LUMN) net income losses have been enormous, but there is a different story emerging that could suggest a turnaround of the company's income statement. ...

Core Insights - The artificial intelligence (AI) infrastructure segment is expected to maintain strong momentum in 2026, driven by robust demand, despite concerns over the high valuations of major AI companies [2][3]. Company Summaries Calix Inc. (CALX) - Calix reported adjusted earnings of $0.39 per share for Q4 2025, exceeding the Zacks Consensus Estimate of $0.38, and significantly up from $0.08 per share a year ago [4]. - Quarterly revenues reached $272.45 million, surpassing the Zacks Consensus Estimate by 0.90% [4]. - The company has integrated AI into its cloud platform to enhance operations and service delivery for broadband providers, with major clients including Lumen Technologies and Verizon [6]. - Calix's expected revenue and earnings growth rates for the current year are 15.6% and 41.5%, respectively, with a 4.9% improvement in the earnings estimate over the last 30 days [7]. Teradata Corp. (TDC) - Teradata reported adjusted earnings of $0.74 per share for Q4 2025, beating the Zacks Consensus Estimate of $0.55, and up from $0.53 per share a year ago [8]. - Total revenues were $421 million, exceeding the Zacks Consensus Estimate by 6.52% [8]. - The company is expected to benefit from improved annual recurring revenue (ARR) growth, cost savings, and productivity measures, which will drive free cash flow [9]. - Teradata's innovative AI capabilities and new product rollouts are anticipated to enhance its analytics offerings and drive long-term growth [10][12]. - The expected revenue and earnings growth rates for Teradata are -2.1% and -3.9%, respectively, with a 0.4% improvement in the earnings estimate over the last 90 days [13]. Lumen Technologies Inc. (LUMN) - Lumen reported adjusted earnings of $0.23 per share for Q4 2025, contrasting with a loss of $0.21 per share as per the Zacks Consensus Estimate, and an adjusted loss of $0.09 per share in the prior year [14]. - Total revenues were $3.041 billion, down 8.7% year over year, and missed the Zacks Consensus Estimate by 1.4% [14]. - The company is focusing on AI-driven solutions, securing $13 billion in Private Connectivity Fabric (PCF) deals by the end of 2025, with revenues of $41 million and $116 million recognized in Q4 and full-year 2025, respectively [15][16]. - Lumen's active customers for its network-as-a-service (NaaS) platform grew by 29% quarter over quarter, indicating strong demand for its services [17]. - The expected revenue and earnings growth rates for Lumen are -12.4% and 15.4%, respectively, with a significant improvement in the earnings estimate of over 100% in the last seven days [18].

Industry Overview - The momentum of the artificial intelligence (AI) infrastructure segment is expected to continue into 2026, supported by a bullish demand scenario [1] - Concerns exist regarding the overstretched valuations of major AI companies, including both infrastructure developers and application implementers [1] Company Highlights Calix Inc. (CALX) - Calix reported quarterly adjusted earnings of $0.39 per share, surpassing the Zacks Consensus Estimate of $0.38, and showing significant growth from $0.08 per share a year ago [6] - Quarterly revenues reached $272.45 million, exceeding the Zacks Consensus Estimate by 0.90% [6] - The company has integrated AI into its cloud platform to enhance operations and service delivery for broadband service providers [8] - Expected revenue and earnings growth rates for Calix are 15.6% and 41.5%, respectively, for the current year [9] Teradata Corp. (TDC) - Teradata reported quarterly adjusted earnings of $0.74 per share, beating the Zacks Consensus Estimate of $0.55, and up from $0.53 per share a year ago [11] - Total revenues were $421 million, exceeding the Zacks Consensus Estimate by 6.52% [11] - The company is expected to benefit from improved annual recurring revenue (ARR) growth, cost savings, and productivity measures [12] - Teradata's expected revenue and earnings growth rates are -2.1% and -3.9%, respectively, for the current year [16] Lumen Technologies Inc. (LUMN) - Lumen reported fourth-quarter adjusted earnings of $0.23 per share, contrasting with a Zacks Consensus Estimate of a loss of $0.21 [17] - Total revenues were $3.041 billion, down 8.7% year over year, and missed the Zacks Consensus Estimate by 1.4% [17] - The company secured $13 billion in AI-linked Private Connectivity Fabric (PCF) deals, boosting demand for its network-as-a-service (NaaS) solutions [18][19] - Lumen's expected revenue and earnings growth rates are -12.4% and 15.4%, respectively, for the current year [21]

Core Viewpoint - Lumen Technologies' CEO Kathleen Johnson demonstrated strong confidence in the company's stock by purchasing $500,000 worth of shares, which led to a nearly 30% increase in the stock price, reversing a significant selloff [1]. Company Summary - Kathleen Johnson, the CEO of Lumen Technologies, made a substantial investment in the company's shares, signaling her belief in its future performance [1]. - Following the share purchase, Lumen's stock experienced a rally of nearly 30%, indicating positive investor sentiment and a potential turnaround for the company [1].

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential, leading to potential losses for investors [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Lumen (LUMN) Stock Analysis - Lumen (LUMN) has shown a four-week price change of 1.9%, indicating growing investor interest and positioning it well for momentum investing [4] - Over the past 12 weeks, LUMN gained 0.9%, and its beta of 1.51 suggests it moves 51% more than the market, indicating strong momentum [5] - LUMN has a Momentum Score of A, suggesting it is an opportune time to invest in the stock for potential success [6] Group 3: Earnings Estimates and Valuation - LUMN's upward trend in earnings estimate revisions has earned it a Zacks Rank 1 (Strong Buy), which is associated with strong momentum effects as analysts raise earnings estimates [7] - The stock is trading at a Price-to-Sales ratio of 0.67, indicating it is relatively cheap, as investors pay only 67 cents for each dollar of sales [7] Group 4: Additional Investment Opportunities - Besides LUMN, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies to help identify winning stock picks based on various investing styles [9]

Investment Rating - The report maintains a positive outlook on the communication equipment and services industry, particularly focusing on investment opportunities in CPO and related supply chain companies [3][11]. Core Insights - North American cloud vendors have reported better-than-expected earnings, with significant capital expenditure guidance increases from major players like Google and Amazon, indicating strong growth in the AI computing industry chain [3][11]. - The report highlights the rapid growth of the optical communication industry driven by AI applications, with leading companies achieving record highs in stock performance [6][9]. - The transition from Scale-OUT to Scale-UP in optical applications is emphasized, suggesting a broadening of application scenarios and increased demand for optical modules and components [6][9]. Summary by Sections Weekly Viewpoint - The optical communication sector is experiencing unprecedented growth, with major cloud companies significantly increasing capital expenditures, leading to a strong performance in the optical communication supply chain [9]. - The report notes that while the market is currently experiencing fluctuations, long-term investment opportunities are becoming more apparent, particularly in the context of rising prices for optical fibers and components [9]. Industry News - Major cloud service providers like Google and Amazon have substantially raised their capital expenditure forecasts for 2026, with Google estimating between $175 billion and $185 billion, nearly double that of 2025, and Amazon projecting around $200 billion, a 50% increase from the previous year [11][24][25]. - The report discusses the implications of a recent tax increase on value-added services in China, which may impact the revenue and profit margins of major telecom operators [12]. Investment Highlights - The report indicates that the proportion of holdings in the optical communication sector has increased, reflecting a positive market sentiment driven by AI-related infrastructure investments [11][41]. - The domestic new generation computing infrastructure is set to enter a new cycle, with significant opportunities arising from the ongoing global infrastructure wave [11][41]. - The report suggests that the AI-driven network upgrades will enhance communication capabilities, leading to rapid advancements in network innovation and technology applications [11][41].

Core Insights - Lumen Technologies' stock surged 29.2% following CEO Kate Johnson's insider purchase of $500,000 worth of shares after a post-earnings sell-off [1][4] Financial Performance - The fourth-quarter adjusted earnings per share exceeded expectations, while revenue met expectations. The full-year free cash flow outlook is projected between $1.2 billion and $1.4 billion, including non-recurring tax refunds of $300 million to $450 million [2] - Despite a decline in overall revenue by 9.5%, approximately 47% of Lumen's enterprise revenue is derived from newer, growing products, which saw a 7% increase last year [3] Stock Valuation and Debt - Lumen's stock is currently valued at 6.4 times this year's free cash flow guidance. The recent sale of its consumer-focused fiber-to-the-home business to AT&T for $4.8 billion has allowed Lumen to reduce its debt load significantly [5] - The company's debt is now just under 3.8 times EBITDA, which is an improvement from previous years but still considered high [6] Future Outlook - While Lumen's stock remains a risky investment, there is potential for upside if the company can successfully grow its revenue and profits, particularly through its new AI-oriented networking solutions [7]

Core Viewpoint - Lumen Technologies' stock experienced a significant increase following CEO Kate Johnson's purchase of approximately $500,000 worth of shares during a recent selloff, indicating investor confidence in her track record of successful insider purchases [1]. Group 1: CEO's Actions - CEO Kate Johnson identified a buying opportunity amid a sharp decline in Lumen's stock price [1]. - Johnson's past insider purchases have been well-timed, contributing to positive investor sentiment [1]. Group 2: Market Reaction - The stock price of Lumen Technologies soared after the announcement of Johnson's share purchase, reflecting investor optimism [1]. - The recent selloff was noted as one of the worst drops the telecommunications stock has faced in years, highlighting the volatility in the sector [1].

Core Insights - Lumen Technologies reported a fourth-quarter 2025 adjusted earnings of 23 cents per share, exceeding the Zacks Consensus Estimate of a loss of 21 cents, while total revenues were $3.041 billion, down 8.7% year over year and missing estimates by 1.4% [2][8] Financial Performance - The company achieved a full-year revenue of $12.4 billion, reflecting a 5% decline [2] - Adjusted EBITDA for the fourth quarter decreased to $767 million from $1.052 billion, with respective margins of 25.2% and 31.6% [12] - Operating loss was $200 million compared to an operating income of $154 million in the prior year [12] Revenue Breakdown - Business revenues fell 8.8% year over year to $2.425 billion [10] - Revenues from Large Enterprises declined 1% to $758 million, Mid-Market Enterprise revenues decreased 11% to $472 million, and Public Sector revenues were down 18% to $457 million [11] - Revenues from Mass Markets decreased by 7.9% year over year to $616 million [11] Strategic Developments - Lumen secured $13 billion in PCF deals by the end of 2025, recognizing revenues of $41 million in Q4 and $116 million for the full year [3] - The company reported a 29% quarter-over-quarter growth in active customers for its NaaS platform [4] - Lumen completed the $5.75 billion cash sale of its Mass Markets fiber business to AT&T, impacting over one million fiber customers [5] Cost Management - The company achieved $400 million in run-rate cost benefits in 2025, exceeding its target of $350 million, with expectations of $700 million in 2026 and $1 billion by the end of 2027 [5] - Total debt was reduced to less than $13 billion, down more than $5 billion since January 2025, resulting in a reduction of annual interest expense by nearly $500 million [6] Cash Flow and Liquidity - Lumen generated $562 million of net cash from operations in Q4, down from $688 million in the prior year [13] - Free cash outflow was $765 million, significantly higher than $174 million in the previous year, affected by a delay in a $400 million tax refund [13] - As of December 31, 2025, the company had $1 billion in cash and cash equivalents [14] Future Outlook - Management anticipates adjusted EBITDA growth in 2026, predicting a range between $3.1 billion and $3.3 billion [15] - Capital expenditures are estimated to be between $3.2 billion and $3.4 billion, a reduction from $4.367 billion in 2025 [17] - Free cash flow is expected to be between $1.2 billion and $1.4 billion, compared to $1.041 billion reported in 2025 [18]

分组1 - Lumen Technologies, Inc. reported a 4Q25 non-GAAP EPS of $0.23, exceeding analyst expectations by approximately $0.50 [1] - Revenue for the quarter was $3.04 billion, representing a year-over-year decline of about 8.7%, but still aligned with consensus estimates [1] 分组2 - The earnings beat indicates potential operational improvements or cost management strategies within the company [1]