Verizon or American Tower: Which is the Smarter 5G Bet for 2026?

Verizon Communications Inc. VZ and American Tower Corporation AMT are key players in the 5G ecosystem. Operating as one of the premier wireless service providers in the United States, Verizon provides a vast array of communication and business solutions that include wireless, local exchange, long-distance, data/broadband and Internet, video, managed networking, wholesale and cloud-based services.

American Tower is a leading independent operator of wireless communications towers. The company leases space on its communication sites to tenants and offers a range of tower-related services. Its tenants include wireless service providers, broadcasters and other communication service providers.

Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the broadband and telecom services industry.

The Case for Verizon

Verizon is benefiting from the growing demand for its industry-leading 5G portfolio. With a customer-centric business model, the company delivers faster peak data speeds and capacity for customers, driven by disciplined engineering and steady infrastructure investments. The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These include massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells.

Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum with premium unlimited plans. It is offering various mix-and-match pricing in both wireless and home broadband plans, which has led to solid customer additions. Moreover, in the enterprise and wholesale business, Verizon is shifting its revenue mix toward newer growth services like cloud, security and professional services. 

Verizon has further expanded Fios Forward to support digital inclusion and provide opportunities for underserved households to thrive in the digital world. With no data caps, Fios customers can experience faster upload and download speeds than any other comparable plans. The telecom giant plans to accelerate the availability of its 5G Ultra Wideband network across the country. The company’s growth strategy includes 5G mobility, nationwide broadband and mobile edge compute and business solutions.

However, the company operates in a highly competitive market and faces rivalry from other major players, such as AT&T, Inc. T and T-Mobile US, Inc. TMUS. AT&T is also aggressively expanding its fiber footprint. The company is acquiring Lumen’s fiber business. It is placing a strong focus on the densification of its existing fiber infrastructure. Such initiatives from AT&T can pose a challenge to Verizon’s fiber network expansion. In a bid to expand its customer base, Verizon is spending heavily on promotion and is also offering lucrative discounts, which are weighing on margins.

The Case for American Tower

American Tower is strategically positioned to capture incremental demand from global 5G deployment efforts, growing wireless penetration and spectrum auctions. The company is also likely to benefit from the advent of next-generation technologies, including edge computing functionality, autonomous vehicle networks and the IoT, along with the rampant usage of network-intensive applications for video conferencing and cloud services and hybrid-working scenarios. American Tower boasts more than 149,000 communication sites worldwide and a highly interconnected footprint of U.S. data center facilities. The advancement in mobile technology, such as 4G and 5G, and the proliferation of bandwidth-intensive applications, propel growth in mobile data usage globally. On average, approximately 75% of its towers have been upgraded with 5G equipment, so there's still considerable runway for growth as carriers complete their 5G coverage rollouts and shift their attention to network quality with densification activity. 

American Tower has a resilient and stable business model that provides a safe harbor. The company generates most of its revenues from non-cancellable, long-term tenant leases (typically with an initial term of 5-10 years and multiple renewal options) on its communication sites with major wireless carriers. In addition, American Tower provides on-site maintenance and servicing of antennas, amplifiers and base station equipment. Since moving equipment from one tower to another is cumbersome, carriers normally renew these contracts upon expiration. This generates a strong long-term lease up-cycle. The revenues generated from leasing and managing such networks are substantial and recurring. Moreover, American Tower’s tall towers allow sufficient space for its customers to install transmission equipment, thereby enabling the company to put up more tenants. Accommodating additional tenants, equipment and upgrades results in additional revenues, offering significant operating leverage as tenancy increases.

However, the company operates in a fiercely competitive market. High customer concentration is another potent risk. The merger between T-Mobile and Sprint resulted in tower site overlap for American Tower, negatively impacting its leasing revenues. Given the contractual lease cancellations and non-renewals by companies like T-Mobile, high churn rate in its U.S. & Canada property segment is likely to remain elevated through 2026.

How Do Zacks Estimates Compare for VZ & AMT?

The Zacks Consensus Estimate for Verizon’s 2025 sales and EPS implies year-over-year growth of 2.3% and 2.2%, respectively. The EPS estimates have remained flat over the past 60 days.

The Zacks Consensus Estimate for American Tower’s 2025 sales and EPS indicates year-over-year decline of 2.1% and growth of 1.2%, respectively. The EPS estimates have been trending northward (up 0.9%) over the past 60 days.

Price Performance & Valuation of VZ & AMT

Over the past year, Verizon has lost 4.9% compared with the industry’s decline of 8.9%. American Tower has plummeted 7.8% over the same period.

Verizon looks more attractive than American Tower from a valuation standpoint. Going by the price/earnings ratio, American Tower’s shares currently trade at 16.29 forward earnings, higher than 8.31 for Verizon.

End Note

Both Verizon and American Tower carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Tower has shown steady revenue growth over the past few years, while Verizon has been witnessing a bumpy road. Estimate revisions for Verizon reveal that investors are largely skeptical about the stock’s growth potential. However, Verizon appears to have attractive valuation metrics compared with American Tower.  Based solely on valuation metrics and a VGM Score of B, Verizon appears to be a better investment option at the moment.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research