Microsoft’s Partnership With Lumen Drives Stock Up 21% And Insiders Are PILING In

Microsoft’s Partnership With Lumen Drives Stock Up 21% And Insiders Are PILING In

I know it’s been a whole couple of seconds since your last AI update, so here’s a story I thought was worth your time. Microsoft is making another big move by teaming up with Lumen Technologies to, in their own words, “supercharge their AI capabilities and speed up their digital transformation.” It’s almost like they saw Google's eyebrow-raising $13 billion splurge and thought, “Alright, time to stop slacking!”

On Wednesday, Lumen proudly announced that they’re teaming up with Microsoft to boost AI capacity. Yep, you heard that right—a Louisiana-based company just a stone’s throw from the Duck Dynasty crew is partnering with Microsoft and using their top-notch network equipment to handle the growing demand at Microsofts data centers. In simple terms, Microsoft’s data centers are getting a major upgrade.

Back in April, Microsoft hit a bit of a snag—they didn’t have enough data infrastructure to roll out their AI models as quickly as they wanted. It’s like the time my friend in college invited me to go to dinner and forgot his wallet. (He made me drive too)

Despite this hiccup, Microsoft was already looked at as the leader in the AI race, thanks to their smart investment in OpenAI, the creators of ChatGPT. As I’m sure you already know, they’ve been pouring billions into their cloud infrastructure to stay ahead of Google and Amazon.

Now, here’s where Lumen comes in. As part of their new deal, Lumen will start using Microsoft’s Azure cloud services to cut down on costs. Think of it like switching from snail mail to email—faster and cheaper. 

(Source: CDN)

The switch to Azure is expected to boost Lumen’s cash flow by over $20 million in the next year, which is a big help for a company that restructured its debt back in March.

(Source: Investing.com)

Speaking of debt, Lumen was carrying a hefty $18.59 billion in long-term debt as of March 31st, according to their latest quarterly earnings report—and that's even after some restructuring. But with this new partnership, Lumen is hoping to turn their financial situation around. Although it doesn’t sound like they’ll be cutting up the credit cards anytime soon.

So why do I think Lumen is still worth a buy, despite their debt being 18 times their current market cap? Well, aside from their cozy partnership with Microsoft, insiders are not only NOT selling shares, they’re backing up the truck and buying them by the truckload. During my research, I found that two insiders scooped up $1 million worth of shares in the last quarter alone. Looks to me like some people with way deeper pockets  are all in on Lumen, and maybe, just maybe, they know something we don’t.

Only time will tell, but with Lumen’s help, Microsoft is aiming to leave Google and Amazon eating their dust in the AI race. Funny enough, this news isn’t giving Microsoft’s stock a boost—it’s down 3%. Meanwhile, Lumen’s stock is loving it, up over 21% for the week.

(Stock.News holds positions in Lumen, Microsoft, Amazon, and Google.)