AT&T Inc. T has gained 58.8% over the past year compared with the industry’s rally of 35.7%. It also outperformed its peers Verizon Communications Inc. VZ and T-Mobile US, Inc. TMUS. Verizon has gained 4.3% and T-Mobile surged 53.2% over this period. T-Mobile continues to enhance its network infrastructure, including 5G and fiber networks, to provide best-in-class coverage and capacity nationwide. On the other hand, Verizon is benefiting from significant 5G adoption and fixed wireless broadband momentum with premium unlimited plans.  

One-Year T Stock Price Performance

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Key Growth Drivers of T

With a customer-centric business model, AT&T is riding on the increased deployment of mid-band spectrum and greater fiber densification. An integrated fiber expansion strategy is expected to improve broadband connectivity for enterprise and consumer markets, while steady 5G deployments are likely to boost end-user experience. AT&T's commitment to closing the digital divide underscores its dedication to fostering inclusive connectivity and driving socio-economic progress as the digital landscape evolves.

AT&T is benefiting from the 5G boom. Its 5G service entails utilization of millimeter-wave spectrum for deployment in dense pockets while in suburban and rural areas, it intends to deploy 5G on mid- and low-band spectrum holdings. The acquisition of mid-band spectrum (C-Band) further offers significant bandwidth with better propagation characteristics for optimum coverage in rural and urban areas. AT&T believes that as the 5G ecosystem evolves, customers can experience significant enhancements in coverage, speeds and devices. 

By 2027, AT&T expects to complete the modernization of its 5G wireless network with open radio access network (Open RAN) technology, with mid-band 5G spectrum covering more than 300 million people by the end of 2026. By the end of 2029, it expects to reach more than 50 million locations with fiber, including about 45 million through organic fiber deployments and more than 5 million through Gigapower. This will coincide with its proposed plan to exit legacy copper network operations across most of its wireline footprint.

Edge Compute Solution: T’s X-Factor

AT&T anticipates gaining a competitive edge over rivals through edge computing services that allow businesses to route application-specific traffic where they need it and where it’s most effective — whether in the cloud, the network or on their premises. Through its Multi-access Edge Compute solution, the company offers the flexibility to better manage data traffic. The MEC leverages indigenous software-defined network to enable low-latency, high-bandwidth applications for faster access to data processing. 

AT&T expects edge computing solutions to be widely available in autonomous vehicles, drones, robotic production lines and autonomous forklifts in the near future. Utilizing machine learning techniques and more connected devices, it could transform the way data-intensive images are transferred across the industry on real real-time basis. The company has extended its long-standing business relationship with Google Cloud to offer end-to-end solutions for improved customer experiences. The solutions are likely to facilitate diverse businesses to better harness edge connections and edge computing capabilities as increased 5G deployments give rise to a large quantum of data. AT&T has also collaborated with Microsoft to move its 5G mobile network to the latter’s cloud. The move will enable AT&T to enhance productivity and deliver large-scale network services to meet customers’ needs.

T Plagued By Waning Legacy Services, Eroding Margins

Despite solid wireless traction, AT&T is facing a steady decline in legacy services. The company’s wireline division is struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. High-speed Internet revenues are contracting due to the legacy Digital Subscriber Line decline, simplified pricing and bundle discounts. As AT&T tries to woo customers with healthy discounts, freebies and cash credits, margin pressures tend to escalate, affecting its growth potential to some extent.

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Estimate Revision Trend of T

Earnings estimates for AT&T for 2025 have moved down 8.9% to $2.14 over the past year, while the same for 2026 has declined 8.9% to $2.26. The negative estimate revision depicts bearish sentiments for the stock.

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End Note

By investing steadily in infrastructure and pioneering new technologies, AT&T is well-positioned to bridge the digital divide and enhance the connectivity landscape nationwide. This is likely to translate into solid postpaid subscriber growth and higher average revenue per user in the Mobility Service business.

However, a saturated wireless market and price wars owing to competitive pressure have eroded its profitability. The downtrend in estimate revisions further portrays skepticism about the stock’s growth potential. With a Zacks Rank #3 (Hold), AT&T appears to be treading in the middle of the road, and 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.

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This article originally published on Zacks Investment Research (zacks.com).

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