Why Lumen Stock Sank Today

Lumen (NYSE: LUMN) stock lost significant ground Monday. The company's share price closed out the day down 7.1%. The broader market saw bearish momentum in the session, with the S&P 500 and the Nasdaq Composite falling 0.5% and 1.3%, respectively.

Tech stocks retreated today as investors braced for potential impacts from Nvidia's upcoming quarterly report. Lumen and other artificial intelligence (AI) stocks also saw their valuations pressured by recent reports about Microsoft's data center spending plans.

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Lumen stock tumbles ahead of Nvidia's highly anticipated Q4 report

Nvidia will report its fourth-quarter results and host an investor conference call after the market closes on Wednesday, and it's poised to be the most important earnings release of 2025 so far. The average Wall Street analyst estimate anticipates that the business will have posted net income of roughly $21.2 billion on revenue of $38 billion.

Beating the market's sales and earnings targets for Q4 could be central to powering a return of bullish momentum for tech stocks in the near term. On the heels of recent developments and reports, the company's forward guidance could be even more important.

What will Nvidia's results say about Lumen's outlook in AI?

In addition to jitters surrounding Nvidia's Q4 report, Lumen stock's pullback today was also driven by recent news surrounding Microsoft. According to recent reports, the tech giant is planning to cut back on some previously planned data center expansion initiatives. This news comes on the heels of recent comments from CEO Satya Nadella that raised concerns about the hype surrounding AI versus the real-world value it's actually created.

Lumen's big stock gains over the last year have been aided by the company landing deals to provide private-connectivity-fabric technologies for Microsoft's AI data centers. If Microsoft were to significantly cut back on its AI infrastructure buildout plans, it could mean a significantly weaker growth outlook in the category for Lumen. Microsoft has been Nvidia's largest customer lately, so investors should get a better idea of the software giant's plans by analyzing Nvidia's sales guidance for the current quarter.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.