On Monday, shares of Lumen (NYSE: LUMN) experienced a decline, closing the day with a 7.1% loss. The broader market also faced downward pressure, with the S&P 500 and Nasdaq Composite indices falling by 0.5% and 1.3%, respectively.
The technology sector saw a retreat as investors anticipated potential effects from Nvidia’s forthcoming quarterly report. Lumen, along with other artificial intelligence (AI) stocks, faced valuation pressures due to recent reports about Microsoft’s data center spending plans.
Nvidia is set to release its fourth-quarter results and conduct an investor conference call after the market closes on Wednesday. This earnings release is expected to be the most significant of 2025 thus far. Wall Street analysts predict Nvidia will report a net income of approximately $21.2 billion on revenue of $38 billion.
Exceeding expectations for sales and earnings in the fourth quarter could be crucial for reigniting bullish momentum within the tech stock sector in the near term. Additionally, the company’s forward guidance may hold even greater importance in light of recent developments and reports.
Aside from concerns regarding Nvidia’s upcoming report, Lumen’s stock decline was also influenced by recent news concerning Microsoft. Reports indicate that Microsoft is planning to scale back on certain previously planned data center expansion projects. This follows comments from CEO Satya Nadella, which raised questions about the hype surrounding AI compared to its actual real-world value.
Lumen’s substantial stock gains over the past year were supported by deals to provide private-connectivity-fabric technologies for Microsoft’s AI data centers. A significant reduction in Microsoft’s AI infrastructure expansion could result in a weakened growth outlook for Lumen in that sector. As Microsoft has been Nvidia’s largest customer recently, investors are expected to gain better insights into the software giant’s plans through Nvidia’s sales guidance for the current quarter.
