Trade Idea LUMN

September 11, 2025

Trade Idea: LUMN $6.14 (Lumen Technologies, Inc)
Buy April 17^th $6.00 Calls for $1.52

Hyperscalers are facing a power crisis. AI data centers require massive amounts of electricity, and the grid cannot supply it fast enough in traditional hubs. To keep growing, companies like Oracle, Microsoft, and Google will go wherever power is available, which means data centers are becoming more widely dispersed across the country.

The Next Problem

That dispersion introduces a second bottleneck: connectivity. For AI workloads, moving huge volumes of data between facilities is just as critical as securing power. If data centers are spread out, they must be linked with ultra-high-speed, low-latency networks. Without this backbone, the advantage of securing new power-rich locations is undermined, because the cloud cannot function seamlessly across sites.

The New Strategy

Lumen Technologies (LUMN) has recently shifted its entire strategy to address this exact problem, intending to become the superhighway that connects dispersed data centers. The company owns one of the largest existing fiber networks in the world, and it is selling non-core assets, paying down debt, and refinancing its balance sheet to free up resources for this opportunity.

While the large telecom companies have big networks, they are mainly focused on the consumer. Lumen appears to be alone in targeting the national-scale, neutral backbone role for hyperscalers/enterprise. As hyperscalers accelerate their data center build in new locations, Lumen is positioning themselves as the indispensable partner that enables the next phase of AI-driven cloud growth. Consider, they currently have $9Bn of orders from these hyperscalers to help build these connections.

“App Store”

What makes this situation even more exciting is how Lumen is upgrading its network to be smarter. Once complete, the company won’t just sell Network-as-a-Service (NaaS), it will also sell software features and products layered on top of that network. Think of it as an App Store for networking. Importantly, it won’t be limited to Lumen’s own products. They just signed a partnership with Palantir, a leader in cloud-agnostic AI, which means enterprises will be able to use Lumen’s network enhanced with Palantir’s capabilities. Lumen will share in the revenues from those services.

The Trade

The stock has been trading well over the past few days as both the CEO and CFO have been making the rounds at investor conferences. Adding fuel, a buyer stepped in on Wednesday with 17,000 LUMN October 17th $6 and 6,000 $7 calls.

Earnings are scheduled for early November, followed by Lumen’s first Analyst Day in 2.5 years on February 25, 2026.

To simplify the story:
1. Securing power, especially clean power, is the bottleneck today.
2. Hyperscalers are moving away from existing clusters (like Virginia) to find more power.
3. This creates connectivity challenges, particularly with speed and latency.
4. Lumen owns the network to connect these new sites and is investing to digitize those connections, adding a software layer on top.

If you’re thinking: “This might become the most important part of the AI race!" Me too. At some point, the market will have the “ah-ha” moment. When that happens, this stock could fly.

I like the LUMN April 17^th $6.00 Calls for $1.52. The Target Stock Price range is $11.00-$12.00.

Note: Buying the stock here is also a “$6.14 Lifetime Option.”

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