We recently compiled a list of the 15 AI News Investors Should Not Miss. In this article, we are going to take a look at where Lumen Technologies, Inc. (NYSE:LUMN) stands against the other AI stocks investors should not miss.
Artificial Intelligence developments are making headlines across various sectors. From high-profile legal battles to groundbreaking advancements in model performance and safety protocols, AI is reshaping the landscape across industries at an unprecedented pace.
READ ALSO: 15 AI News Investors Should Not Miss and 20 Trending AI Stocks on Latest News and Ratings
Before we move on to the breaking news on AI, let’s talk about Morningstar’s recent report. The investment research firm reveals that for the third consecutive year, investors are leaving exchange-traded funds related to specific themes for funds linked to broad stock-market benchmarks “that are hitting record highs”. Despite overall growth in equity ETFs, thematic ETFs have lost $5.8 billion in investor capital in the year 2024. This is greater than $4.8 billion outflows in all of 2023. The reason? Broad market index returns are setting a higher bar for thematic funds this year.
“It’s not that people don’t like the idea of themes any longer, but that a bull market dominated by a handful of megacaps makes it hard for any theme to stand out”.
-Aniket Ullal, ETF analyst at CFRA, a market research firm.
As per Morningstar, thematic ETFs often struggle due to mistimed investments, with investors usually missing out on two-thirds of their returns. Despite some AI-themed funds having strong holdings, higher fees and timing challenges reduce their overall appeal.
“I think that when S&P 500 megacaps stop delivering the way they do today, the focus will shift back to thematic ETFs”.
-Taylor Krystkowiak, investment strategist at Themes ETFs, an investment management firm.
Moreover, while AI remains a key focus in many thematic ETFs, its impact goes far beyond investing. Consider Penguin Random House, the first of the Big Five anglophone trade publishers to amend its copyright information. The publisher has recently added a language to its copyright pages to prohibit the use of those books to train AI. Publishers and AI firms will be increasingly clashing in the future if clear guidelines and processes aren’t kept in place. In a similar endeavor, The New York Times has sent Perplexity AI, an AI-powered research firm, a “cease and desist” notice demanding that it stop using the newspaper’s content for generative AI purposes. The news publisher claims that the way the AI Company uses its material violates copyright law.
In other news, Anthropic, a U.S.-based artificial intelligence public-benefit startup, is now adding a comprehensive update to its safety policy, reinforcing the guardrails of its AI as it becomes more capable. This push to improve AI safety is in stark contrast to competitors such as OpenAI, whose increasing focus on improving capabilities and performance is very likely to threaten safety guidelines in the future. As per McKinsey, 63% of companies consider inaccuracy risk to be relevant. However, only 38% of companies are working to mitigate the risk.
While artificial intelligence may be intimidating, it is equally, if not more, beneficial for mankind. In its latest achievement, AI has helped UCLA researchers develop a deep-learning framework that teaches itself to automatically analyze and diagnose MRIs and other 3D medical images. That too, with the accuracy matching that of medical specialists in a fraction of the time. Another breakthrough from Archetype AI, a physical AI company, is set to significantly change how we understand and interact with the physical world. The model, named Newton, shows the unparalleled capacity to generalize across diverse physical phenomena using only raw sensor measurements as input.
Finally, in our roundup of the latest AI news, the US rules that will ban certain US investments in artificial intelligence in China are under final review, as per a government posting. The rules, requiring US investors to notify the Treasury Department regarding some investments in AI and other stem technologies, come from an executive order signed by President Joe Biden in August 2023. The order aims to keep American investors’ know-how from aiding China’s military. Chipmakers and related companies that may be impacted by the decisions denied responding to Reuters’ requests for comment.
Methodology
For this article, we selected AI stocks by combing through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Close-up of a technician’s hands adjusting a communication router.
Lumen Technologies, Inc. (NYSE:LUMN)
Number of Hedge Fund Holders: 18
Lumen Technologies, Inc. (NYSE:LUMN) is a global communications services provider that offers various integrated products and services to business and residential customers. The telecom company has been benefitting from soaring AI demand and the need for greater connectivity between data centers, with it being in a strategic position to help drive the AI growth wave.
On October 21, Lumen Technologies, Inc. (NYSE:LUMN) announced that it will be partnering with Meta Platforms Inc. to increase the latter’s network capacity and help drive its “bold AI missions”. The partnership will offer it enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and allowing it to serve billions daily. Meta will be able to improve the size and dependability of its AI system through Lumen’s Private Connectivity Fabric providing dedicated connections.
“We’re enabling one of the biggest expansions of network capacity in our lifetime. We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
– Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer.
Following the partnership news, Raymond James analyst Frank Louthan stated that the partnership is unlikely to move Lumen’s stock. He maintains a “Market Perform” rating on Lumen. He also emphasized that this action appears to be part of the previously announced $5 billion conduit network transaction from August.
“We do not believe this announcement warrants any near-term moves in the shares as it is likely already reflected in the outlook”.
-Analyst Frank Louthan.
Overall LUMN ranks 12th on our list of the AI stocks investors shouldn’t miss. While we acknowledge the potential of LUMN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LUMN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.