Cogent Communications (CCOI) has popped up on unusual bull flow alerts the past week as 1500 November $70 short puts opened, 1500 December $85/$95 call spreads bought and 1200 December $80 calls were bought. CCOI also saw a Director buy 10,000 shares at $52.61 back in June. CCOI shares have been on a strong multi-month run and the monthly chart shows share breaking out of a big range with a likely move to $100 underway.

Cogent is a facilities-based provider of low-cost, high-speed Internet access, private network services, and data center colocation space and power. Its network is specifically designed and optimized to transmit packet routed data. CCOI delivers services to businesses, large and small, communications service providers and other bandwidth-intensive organizations in 54 countries across North America, Europe, Asia, South America, Oceania and Africa. Its on-net service consists of high-speed Internet access and private network services offered at speeds ranging from 100 megabits per second.

CCOI has a market cap of $4.16B and trades 93.5X Earnings, 22.7X EBITDA and 5.9X EV/Sales with revenues seen rising 3.3% in FY25 while EBITDA seen down 8.5%. CCOI presented at the RBC Communications Conference in late September and next report in early November. CCOI’s corporate business has been recovering from the pandemic and return to office a likely positive driver in 2025. The long term trends of Internet pricing coming down, volumes growing and having a ubiquitous reach has allowed Cogent to capture market share.

Management sees CCOI benefiting from AI in three ways: “ First, on the Internet side of our business, there will be more data collected than ever before because that data now has value. Secondly, as the outputs of the training models get embedded in existing software, it is likely that, that software will be both more bit intensive and will be more cloud or SaaS based, meaning needing more IO to and from the Internet. The second thing that is helpful to Cogent is the increase in demand for transport services is really the question you asked, which is the fact that the locations of the data that are being used for these training models don’t sit co-resident with the actual computing. There is today a shortage of space and more importantly, power to perform that function and often times the training has to be placed in a market where power is available and the datasets reside in another market. So the cheapest, easiest way to move information is over the public Internet. It’s the most ubiquitous, it’s the easiest to use and it has the lowest cost per bit mile. And moving up the hierarchy, you will spend about 2.5 times as much per bit mile to rent a wavelength, but a wavelength or any dedicated service has three attributes that certain customers value.”

Cogent is also acquired a former long-distance voice network from T-Mobile for $1 and is in the process of repurposing those assets, taking the fiber, physically extending it to connect to metro networks in 110 markets around the country, reconfiguring those metro markets to support wavelength services, deploying transponder shelves and ROADMs along that network so they can then provision rapidly wavelengths. It is opening a new $2 billion addressable market for Cogent.

KeyBanc notes there is about $60/share from hidden assets alone, and when paired with accelerating organic growth and improved cost takeout, shares could drive meaningfully higher.

Although CCOI shares have made a big run there remains plenty of upside opportunity despite valuation concerns.