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AT&T Increases 4.7% Year to Date: How to Play the Stock?
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Key Takeaways
AT&T is gaining from record fiber additions, wireless growth and bundled connectivity services.
T's fiber expansion targets 8 million new locations, including more than 4 million from Lumen.
AT&T expects $23-$24 billion in annual capital investment, pressuring near-term free cash flow.
AT&T, Inc. (T - Free Report) has gained 4.7% year to date compared with the Wireless National industry’s growth of 119.6%. The stock has underperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
Image Source: Zacks Investment Research
Among its peers, the company has underperformed Verizon Communications Inc. (VZ - Free Report) but outperformed T-Mobile, US, Inc. (TMUS - Free Report) . Verizon has gained 23.5%, while T-Mobile has lost 10.3% year to date.
T’s Major Growth Drivers
Fiber expansion is one of AT&T’s strongest long-term growth catalysts. The company delivered a strong quarter for fiber additions in the second quarter of 2026. Advanced Home Internet service revenues increased more than 27% year over year. The company remains well on track to reach 8 million new fiber locations. It has already acquired more than 4 million locations from the acquired Lumen business.
Wireless remains an important contributor to revenue growth. Wireless service revenues increased 3.3% year over year in the second quarter, backed by 432,000 postpaid phone net additions and pricing adjustments. AT&T also reported year-over-year growth in postpaid phone ARPU while reducing churn. AT&T’s strategy of selling wireless and home internet together is lowering churn and improving monetization.
AI-Driven Demand for High-Capacity Networks will likely become a long-term growth driver for the company. Management expects the expansion of agentic and autonomous AI applications to substantially increase network traffic. Applications such as autonomous vehicles, robotics, drones and augmented-reality devices are expected to require highly capable uplink and edge connectivity. AT&T believes its combination of dense metro fiber and nationwide spectrum positions the company to benefit from this increase in data-intensive traffic.
AT&T is scaling down its legacy copper network and moving customers toward fiber and wireless services. Management remains on track to achieve $4 billion in annual consolidated cost savings by 2028. These cost savings initiatives are boosting profitability.
Major Challenges
AT&T operates in highly competitive wireless and broadband markets, where customer additions and pricing require sustained investment and disciplined execution. The company is competing with Verizon and T-Mobile US for wireless customers while also competing aggressively for broadband subscribers.
T is undertaking substantial investment to expand its fiber footprint and strengthen its advanced connectivity infrastructure. Capital investment reached $6.1 billion in the second quarter of 2026, up from $5.1 billion a year earlier, and the company expects total annual capital investment of $23-$24 billion. Although these investments support long-term growth, they place pressure on near-term free cash flow.
AT&T's balance sheet could face additional pressure from its planned acquisition of spectrum licenses from EchoStar. Net debt-to-adjusted EBITDA stood at 2.68 times at the end of the second quarter of 2026, and management expected leverage to rise to approximately 3.2 times following completion of the transaction.
Estimate Revision of T
Earnings estimates for AT&T, for fiscal 2026 and fiscal 2027, have moved up 1.29% to $2.35 and 1.18% to $2.57, respectively, over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of T
From a valuation standpoint, AT&T appears to be trading relatively cheaper compared to the industry and trading below its mean. Going by the price/earnings ratio, the company shares currently trade at 10.37 forward earnings, lower than 37.94 for the industry.
Image Source: Zacks Investment Research
End Note
AT&T is well positioned to benefit from sustained growth in fiber, wireless and bundled connectivity services. Accelerating fiber deployment, the expansion of the Lumen footprint and strong postpaid wireless additions are broadening the company’s customer base. Convergence strategy is improving customer retention. However, intense competition in wireless and broadband continues to weigh on margins. High debt obligations are concerning. With a Zacks Rank #3 (Hold), AT&T offers a relatively balanced outlook, suggesting that new investors should approach the stock cautiously. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
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AT&T Increases 4.7% Year to Date: How to Play the Stock?
Key Takeaways
AT&T, Inc. (T - Free Report) has gained 4.7% year to date compared with the Wireless National industry’s growth of 119.6%. The stock has underperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
Image Source: Zacks Investment Research
Among its peers, the company has underperformed Verizon Communications Inc. (VZ - Free Report) but outperformed T-Mobile, US, Inc. (TMUS - Free Report) . Verizon has gained 23.5%, while T-Mobile has lost 10.3% year to date.
T’s Major Growth Drivers
Fiber expansion is one of AT&T’s strongest long-term growth catalysts. The company delivered a strong quarter for fiber additions in the second quarter of 2026. Advanced Home Internet service revenues increased more than 27% year over year. The company remains well on track to reach 8 million new fiber locations. It has already acquired more than 4 million locations from the acquired Lumen business.
Wireless remains an important contributor to revenue growth. Wireless service revenues increased 3.3% year over year in the second quarter, backed by 432,000 postpaid phone net additions and pricing adjustments. AT&T also reported year-over-year growth in postpaid phone ARPU while reducing churn. AT&T’s strategy of selling wireless and home internet together is lowering churn and improving monetization.
AI-Driven Demand for High-Capacity Networks will likely become a long-term growth driver for the company. Management expects the expansion of agentic and autonomous AI applications to substantially increase network traffic. Applications such as autonomous vehicles, robotics, drones and augmented-reality devices are expected to require highly capable uplink and edge connectivity. AT&T believes its combination of dense metro fiber and nationwide spectrum positions the company to benefit from this increase in data-intensive traffic.
AT&T is scaling down its legacy copper network and moving customers toward fiber and wireless services. Management remains on track to achieve $4 billion in annual consolidated cost savings by 2028. These cost savings initiatives are boosting profitability.
Major Challenges
AT&T operates in highly competitive wireless and broadband markets, where customer additions and pricing require sustained investment and disciplined execution. The company is competing with Verizon and T-Mobile US for wireless customers while also competing aggressively for broadband subscribers.
T is undertaking substantial investment to expand its fiber footprint and strengthen its advanced connectivity infrastructure. Capital investment reached $6.1 billion in the second quarter of 2026, up from $5.1 billion a year earlier, and the company expects total annual capital investment of $23-$24 billion. Although these investments support long-term growth, they place pressure on near-term free cash flow.
AT&T's balance sheet could face additional pressure from its planned acquisition of spectrum licenses from EchoStar. Net debt-to-adjusted EBITDA stood at 2.68 times at the end of the second quarter of 2026, and management expected leverage to rise to approximately 3.2 times following completion of the transaction.
Estimate Revision of T
Earnings estimates for AT&T, for fiscal 2026 and fiscal 2027, have moved up 1.29% to $2.35 and 1.18% to $2.57, respectively, over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of T
From a valuation standpoint, AT&T appears to be trading relatively cheaper compared to the industry and trading below its mean. Going by the price/earnings ratio, the company shares currently trade at 10.37 forward earnings, lower than 37.94 for the industry.
Image Source: Zacks Investment Research
End Note
AT&T is well positioned to benefit from sustained growth in fiber, wireless and bundled connectivity services. Accelerating fiber deployment, the expansion of the Lumen footprint and strong postpaid wireless additions are broadening the company’s customer base. Convergence strategy is improving customer retention. However, intense competition in wireless and broadband continues to weigh on margins. High debt obligations are concerning. With a Zacks Rank #3 (Hold), AT&T offers a relatively balanced outlook, suggesting that new investors should approach the stock cautiously. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.