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VZ Shares Rise 14.7% in a Year: What's the Next Move for Investors?
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Key Takeaways
Verizon added 406,000 postpaid phone customers in Q3 2026, its strongest third-quarter gain in five years.
Broadband additions and Frontier integration support Verizon's convergence strategy and lower customer churn.
Verizon's $2 billion AWS fiber deal boosts AI opportunities, while rising debt and capex pose challenges.
Verizon Communications Inc. (VZ - Free Report) has increased 14.7% in a year compared with the Wireless National industry’s growth of 105.6%. The stock has outformed the Zacks Computer & Technology sector during this period.
Image Source: Zacks Investment Research
The company has outperformed its peers like AT&T Inc. (T - Free Report) and T-Mobile US, Inc. (TMUS - Free Report) . Shares of AT&T have declined 12.9%, while T-Mobile has declined 21.3% during this period.
Key Growth Drivers for Verizon
Verizon's improving wireless subscriber momentum is emerging as a major driver of its growth. In the third quarter of 2026, the company added 406,000 postpaid phone customers, marking its strongest third-quarter performance in five years. Postpaid account net additions reached 137,000, the highest quarterly performance in more than a decade. At the same time, postpaid phone churn improved to 0.94%, down 4 basis points year over year.
Moreover, Verizon reduced its promotional customer acquisition and retention costs by 41% and 30%, respectively. The combination of higher subscriber additions, lower churn and reduced customer acquisition expenses reflects an improvement in customer economics. Encouraged by these trends, management raised its 2026 postpaid phone net addition target to 1.1-1.2 million from the previous range of 750,000-1 million.
Broadband expansion and the growing adoption of converged services provide another important growth opportunity. Verizon added 314,000 broadband subscribers in the third quarter, taking its total broadband connections to approximately 17.4 million. Verizon remains on track to exceed 32 million fiber passings by the end of 2026, with a longer-term target of 40-50 million. The integration of Frontier Communications is expanding Verizon's fiber footprint and creating additional opportunities to cross-sell wireless and broadband services. Management noted that customers subscribing to both services demonstrate lower churn than single-product customers, supporting higher customer lifetime value.
AI infrastructure represents an emerging source of revenue diversification for Verizon. The company has signed a dark fiber agreement worth more than $2 billion with Amazon Web Services (AWS), building on its earlier agreement with Google to connect AI data centers. Management disclosed approximately $4 billion in signed contracts, supported by growing demand from hyperscalers, neocloud providers and enterprise customers.
Major Challenges for Verizon
Intensifying competition in the U.S. wireless and broadband markets remains a significant concern for Verizon. The company faces strong competition from AT&T, T-Mobile and cable operators, which continue to use competitive pricing, promotional incentives and bundled offerings to attract subscribers. Although Verizon has recently improved customer acquisition and retention metrics, sustaining subscriber growth without increasing promotional spending will be important. Its strategy of competing through network quality, customer experience and value-added services rather than aggressive price discounts could help protect margins. However, competitors adopting similar convergence strategies or increasing promotional activity could put pressure on Verizon's subscriber growth and pricing flexibility.
Weakness in equipment revenue is another challenge for the company. While mobility and broadband service revenue increased 2.9% year over year to $23.5 billion in the third quarter, lower equipment sales limited overall revenue growth. Total revenue increased just 1.5% to $34.3 billion, as equipment revenue declined 9% year over year. Management attributed the decline primarily to a reduction in wireless device upgrade activity, with postpaid upgrade volumes falling 20.3% from the prior-year quarter.
Verizon's substantial investment requirements and elevated debt remain important considerations. The company continues to allocate significant capital toward fiber deployment, wireless spectrum, network modernization and AI infrastructure. Its 2026 capital expenditure outlook remains at $16-$16.5 billion. Verizon reported total debt of $166.2 billion at the end of the third quarter, compared with $146.8 billion a year earlier. Net unsecured debt stood at $123.7 billion, while its net unsecured debt-to-adjusted EBITDA ratio was 2.3X. High debt burden may limit financial flexibility and leave very little room for execution related obstacles.
Estimate Revision Trend of VZ
Earnings estimates for VZ for 2026 and 2027 have remained increased for the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of VZ
From a valuation standpoint, VZ appears to be trading relatively cheaper compared to the industry and its mean. Going by the price/earnings ratio, the company’s shares currently trade at 8.65, lower than 23.16 for the industry.
Image Source: Zacks Investment Research
End Note
Verizon is benefiting from strong demand for postpaid services and healthy broadband additions. The company’s convergence strategy is improving churn rate by increasing customers’ lifetime value. AI infrastructure contracts are opening up a new avenue for growth. However, the highly saturated and competitive us wireless market continues to impact growth prospects. High capex requirements will continue to impact free cash flow in the near term to a certain extent. High debt burden leaves little space for execution drawbacks. With a Zacks Rank #3 (Hold), VZ appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. 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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VZ Shares Rise 14.7% in a Year: What's the Next Move for Investors?
Key Takeaways
Verizon Communications Inc. (VZ - Free Report) has increased 14.7% in a year compared with the Wireless National industry’s growth of 105.6%. The stock has outformed the Zacks Computer & Technology sector during this period.
Image Source: Zacks Investment Research
The company has outperformed its peers like AT&T Inc. (T - Free Report) and T-Mobile US, Inc. (TMUS - Free Report) . Shares of AT&T have declined 12.9%, while T-Mobile has declined 21.3% during this period.
Key Growth Drivers for Verizon
Verizon's improving wireless subscriber momentum is emerging as a major driver of its growth. In the third quarter of 2026, the company added 406,000 postpaid phone customers, marking its strongest third-quarter performance in five years. Postpaid account net additions reached 137,000, the highest quarterly performance in more than a decade. At the same time, postpaid phone churn improved to 0.94%, down 4 basis points year over year.
Moreover, Verizon reduced its promotional customer acquisition and retention costs by 41% and 30%, respectively. The combination of higher subscriber additions, lower churn and reduced customer acquisition expenses reflects an improvement in customer economics. Encouraged by these trends, management raised its 2026 postpaid phone net addition target to 1.1-1.2 million from the previous range of 750,000-1 million.
Broadband expansion and the growing adoption of converged services provide another important growth opportunity. Verizon added 314,000 broadband subscribers in the third quarter, taking its total broadband connections to approximately 17.4 million. Verizon remains on track to exceed 32 million fiber passings by the end of 2026, with a longer-term target of 40-50 million. The integration of Frontier Communications is expanding Verizon's fiber footprint and creating additional opportunities to cross-sell wireless and broadband services. Management noted that customers subscribing to both services demonstrate lower churn than single-product customers, supporting higher customer lifetime value.
AI infrastructure represents an emerging source of revenue diversification for Verizon. The company has signed a dark fiber agreement worth more than $2 billion with Amazon Web Services (AWS), building on its earlier agreement with Google to connect AI data centers. Management disclosed approximately $4 billion in signed contracts, supported by growing demand from hyperscalers, neocloud providers and enterprise customers.
Major Challenges for Verizon
Intensifying competition in the U.S. wireless and broadband markets remains a significant concern for Verizon. The company faces strong competition from AT&T, T-Mobile and cable operators, which continue to use competitive pricing, promotional incentives and bundled offerings to attract subscribers. Although Verizon has recently improved customer acquisition and retention metrics, sustaining subscriber growth without increasing promotional spending will be important. Its strategy of competing through network quality, customer experience and value-added services rather than aggressive price discounts could help protect margins. However, competitors adopting similar convergence strategies or increasing promotional activity could put pressure on Verizon's subscriber growth and pricing flexibility.
Weakness in equipment revenue is another challenge for the company. While mobility and broadband service revenue increased 2.9% year over year to $23.5 billion in the third quarter, lower equipment sales limited overall revenue growth. Total revenue increased just 1.5% to $34.3 billion, as equipment revenue declined 9% year over year. Management attributed the decline primarily to a reduction in wireless device upgrade activity, with postpaid upgrade volumes falling 20.3% from the prior-year quarter.
Verizon's substantial investment requirements and elevated debt remain important considerations. The company continues to allocate significant capital toward fiber deployment, wireless spectrum, network modernization and AI infrastructure. Its 2026 capital expenditure outlook remains at $16-$16.5 billion. Verizon reported total debt of $166.2 billion at the end of the third quarter, compared with $146.8 billion a year earlier. Net unsecured debt stood at $123.7 billion, while its net unsecured debt-to-adjusted EBITDA ratio was 2.3X. High debt burden may limit financial flexibility and leave very little room for execution related obstacles.
Estimate Revision Trend of VZ
Earnings estimates for VZ for 2026 and 2027 have remained increased for the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of VZ
From a valuation standpoint, VZ appears to be trading relatively cheaper compared to the industry and its mean. Going by the price/earnings ratio, the company’s shares currently trade at 8.65, lower than 23.16 for the industry.
Image Source: Zacks Investment Research
End Note
Verizon is benefiting from strong demand for postpaid services and healthy broadband additions. The company’s convergence strategy is improving churn rate by increasing customers’ lifetime value. AI infrastructure contracts are opening up a new avenue for growth. However, the highly saturated and competitive us wireless market continues to impact growth prospects. High capex requirements will continue to impact free cash flow in the near term to a certain extent. High debt burden leaves little space for execution drawbacks. With a Zacks Rank #3 (Hold), VZ appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.