Like most companies, Verizon Communications (VZ -0.20%) is looking at how it can best leverage the power of artificial intelligence (AI). The telecom giant is already using the technology to enhance the customer experience and drive efficiencies in its business.
It sees an even greater market opportunity to leverage its assets to connect the AI ecosystem. The company estimates that there is a total addressable market of more than $40 billion by 2030. Here's a look at how Verizon could become a major player in AI over the coming years.
Verizon has been steadily integrating more AI technologies into its business. The company launched several new generative AI (genAI) tools to improve the way it serves its customers. It has developed and deployed industry-leading, human-assisted genAI applications to simplify experiences and help make every interaction with its customers positive.
For example, the company launched a personal shopper/problem solver that uses AI to analyze a customer's profile and give employees insight into the customer and why they may be calling. These tools enable the company to provide answers, offers, experiences, and products tailored to the customer's needs.
These AI tools help save Verizon time and money, improve retention rates, and increase sales. That's having a positive financial impact on the company.
Verizon believes it's only scratching the surface of its AI potential. The company believes it can become a key enabler of the technology by using its assets to connect the AI ecosystem. It sees two opportunities for its business to capitalize on the growing need for AI infrastructure:
Verizon estimates that the total addressable market for telco AI delivery will be more than $40 billion by 2030. The company believes it's in a strong position to capture a sizable percentage of this opportunity due to its industry-leading assets. Verizon OneFiber is in 71 cities, with close proximity to enterprises and data centers. It also has significant data center capacity to support edge computing.
The telecom company is launching Verizon AI Connect to leverage its assets to provide companies greater access to the infrastructure they need to support their AI ecosystem. Verizon is currently pursuing over $1 billion in business by leveraging its existing infrastructure.
The company has already formed partnerships with several AI leaders, including Nvidia, Alphabet's Google, and Meta Platforms. For example, it's working with semiconductor giant Nvidia on how to integrate GPU-based edge platforms into Verizon's private 5G networks. Meanwhile, it's collaborating with Google Cloud to advance AI solutions for network maintenance and anomaly detection. It has also expanded its existing partnership with Meta into network infrastructure.
The telecom giant is "seeing significant demand for reliable network infrastructure that can support existing AI workloads," according to Verizon Business CEO Kyle Malady. The company can initially support this demand with its existing infrastructure, which will enhance its revenue and returns. This robust demand could also provide the company with new investment opportunities to expand its already industry-leading asset base and support the future infrastructure needs of technology companies and other customers.
Verizon sees tremendous potential for AI to enhance its business. It's already using the technology to improve customer experiences and increase efficiency. The telecom company sees an even bigger potential revenue opportunity in leveraging its telecom assets to provide the infrastructure needed to support the AI ecosystem. That could help the company accelerate its earnings growth, which, when added to its high-yielding dividend (6.7%), sets Verizon up to potentially produce robust total returns in the coming years.
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