The telecom company is staking its future on open models, both to control token cost and protect its proprietary data.
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AT&T delivered a strong Q2, adding over 1 million Advanced Connectivity customers and achieving record fiber net adds in the second-quarter. AT&T's free cash flow rose 7% Y/Y to $4.7B, supporting a robust 235% dividend coverage ratio and reinforcing income appeal. Management guides for higher free cash flow in coming years amid a continual broadband buildout, with the potential for future dividend increases as expansion continues.
AT&T (T) has been one of the stocks most watched by Zacks.com users lately. So, it is worth exploring what lies ahead for the stock.
AT&T baby bonds offer a 6.7% yield, trading at a 20% discount to par due to elevated interest rates. AT&T reported Q2 revenues of $31.6B and $5.04B in net profit, supporting robust coverage for both interest and preferred dividends. With $18B in targeted 2024 free cash flow, T's senior securities remain well covered despite heavy capital investments.
One positive trend from the trio of reports last week is that telecommunications companies are no longer paying up for growth through promotions or subsidization. All three companies grew earnings per share (EPS) year over year (YOY) in Q2, indicating stronger retention economics and subscriber growth.
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However, that doesn't mean Starlink won't be an overhang on wireless stocks.
T is building 2026 momentum through fiber convergence, 5G reach, edge demand and Open RAN savings, while competition and capital needs remain checks.
T's earnings beat, rising free cash flow and low valuation strengthen its value case, but debt, heavy spending and uneven growth temper the outlook.
T's 2026 outlook rests on fiber, 5G and bundled growth, but wireless promotions, legacy declines and heavy investment keep risks elevated.
AT&T says fiber, wireless convergence and copper shutdowns are driving growth, margin gains and faster buybacks while 2026 targets remain intact.