AT&T Shares Rise 14.2% in a Year: Should You Invest Now?

AT&T, Inc. T has gained 14.2% over the past year against the Wireless National industry’s decline of 5.1%. The stock has underperformed compared to the Zacks Computer & Technology sector and the S&P 500’s growth during this period.

The company has outperformed its peers like Verizon Communications Inc. VZ and T-Mobile US, Inc. TMUS. Verizon has gained 0.7%, while TMUS has decreased 11.5% during this period.

T Rides on Portfolio Strength, Customer Growth

AT&T is rapidly expanding its portfolio offerings to cater to evolving customer requirements. Rapid AI adoption, growing cloud dependency and expanding overall digital infrastructure have exposed organizations to a greater cyber threat. This has made high-performance, secure networks an essential component in daily operations. To match these requirements, T has introduced AT&T Express Waves, designed to deliver ultra-fast, highly secure and higher-capacity connections.

High-capacity bandwidth, ultra-low latency and a dedicated fiber optic connection that avoids public Internet are major features of this product. With 4x top speed faster than the current top speed on the AT&T network, it efficiently supports high data volume, AI training and inference, real-time analytics and empowers businesses to swiftly scale operations as per evolving requirements.

The company also recently added 10 million fiber Internet customers in the United States. This is nearly 40% higher than its major competitor, Verizon Communications. A strong focus on Internet speed, performance and reliability is giving T a competitive edge. The acquisition of Lumen’s Mass Markets fiber business, which is expected to close in early 2026, will add 1 million fiber customers and 4 million fiber locations across 11 U.S. states. The company is well-positioned to reach 60 million total fiber locations by the end of 2026.

The company is benefiting from healthy traction in the consumer wireline and mobility business. The company reported 288K fiber net adds and 16.8% year-over-year fiber revenue growth, which boosted the consumer wireline business.

Key Challenges for T

The company’s service revenue growth was 0.8% year over year during the third quarter. The flat revenue growth is followed by a decline in postpaid phone ARPU, which declined to $56.64 per share from $57.07 a year ago. The company’s customer retention remains weak as postpaid churn rose to 1.07% from 0.93%. Stiff competition from other industry leaders such as Verizon, T-Mobile and Comcast is impacting customer retention and ARPU growth. We expect the pressure to persist on both wireless and broadband in the near term as well.

As AT&T tries to woo customers with healthy discounts, freebies, cash credits and margin pressures tend to escalate. This is likely to affect its growth potential to some extent. 

Verizon’s recent initiatives, such as fiber infrastructure expansion and the acquisition of Frontier Communications, are expected to challenge AT&T’s competitive advantage in fiber in the long run.

Business wireline revenues declined 7.8% year over year, while EBITDA from this segment decreased 12.9% year over year. Despite growth in fiber connectivity services, continued secular pressure on legacy and other traditional services is impacting growth in Business wireline.

Estimate Revision Trend of T

Earnings estimates for AT&T for 2025 have remained unchanged over the past 60 days, while for 2026, it has increased by 0.89%.

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 11.24 forward earnings, lower than 11.8 for the industry and the stock’s mean of 12.56.

End Note

The company is aggressively expanding its fiber infrastructure, and it has doubled its fiber customers in the last five years. Introduction of products like AT&T Guarantee underscores its customer-oriented approach. Healthy traction in the consumer wireline and mobility business is expected to be a key growth driver.

However, intensifying competition in the telecom market is putting pressure on revenue growth. Weakness in Business Wireline remains a major concern. With a Zacks Rank #3 (Hold), AT&T 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.

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

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