AT&T Shares Rise 9.5% in a Year: Should You Invest Now?

AT&T, Inc. T has gained 9.5% over the past year against the Wireless National industry’s decline of 3.7%. However, the stock has underperformed compared to the Zacks Computer & Technology sector and the S&P 500’s growth during this period.

The company has underperformed its peers like Verizon Communications Inc. VZ and outperformed T-Mobile US, Inc. TMUS. Verizon has gained 18.8%, while TMUS has decreased 16.8% during this period.

Key Growth Drivers

AT&T is witnessing solid momentum in the Communications segment. During 2025, segment revenues rose to $120.89 billion, up from $117.7 billion in 2024. There are multiple growth drivers in this segment.

In 2025, the company reported more than 1.5 million postpaid net adds. This is the fifth consecutive year with more than 1.5 million net adds. It reported continued wireless share gains in fiber markets. This confirms that AT&T’s convergence strategy is paying off well. When customers get dependent on multiple services from a single vendor, it becomes difficult for them to change service providers. This higher switching friction lowers churn rate and boosts customer retention.

The company is taking a consistent and disciplined approach to pricing. It focuses on improving ARPU by offering converged solutions rather than just price hikes.
 
AT&T is also steadily transforming its mobile network architecture from traditional vendor-locked systems to a more open, software-driven, and programmable network. The upgrades will prepare towers for multi-vendor networks, effectively support cloud-based network functions and increase energy efficiency. The company has also tested AI native link adaptation from Ericsson. AI can predict signal degradation, optimize throughput and ensure spectrum efficiency.

It has also recently introduced a Connected AI solution to expedite smart manufacturing processes. The Connected AI solution features advanced, Gen AI-powered modeling and analytics. The company has collaborated with industry leaders, such as MicroAI, NVIDIA and Microsoft in this venture. The solution finds out bottlenecks in the process, identifies root causes and also provides recommendations to fix them. Such innovation bodes well for long-term growth.

Major Challenges for T

In a saturated wireless market, spectrum crunch has become a major issue in the U.S. telecom industry. Most of the carriers are finding it increasingly difficult to manage mobile data traffic, which is growing by leaps and bounds. The situation has become even more acute with the growing popularity of iPhone and Android smartphones, as well as rising online mobile video streaming, cloud computing and video conferencing services.

As of Dec. 31, 2025, AT&T had $18.23 billion of cash and cash equivalents with long-term debt of $127.09 billion compared with respective tallies of $20.27 billion and $128.09 billion in the previous quarter. This indicates that although its short-term liquidity has declined, its long-term debt burden has decreased.

The time interest earned ratio has decreased to 5 from 5.2 in the third quarter. At the end of the fourth quarter, the company had a current ratio of 0.91 and a cash ratio of 0.34. It indicates the company may face challenges in meeting short-term debt obligations. It has a dividend payout rate of 52.6%. It remains to be seen how AT&T aims to reduce the huge debt burden in the coming days.

Estimate Revision Trend of T

Earnings estimates for AT&T for 2026 and 2027 have increased over the past 60 days.

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 12.01 forward earnings, lower than 13.14 for the industry and the stock’s mean of 12.56.

End Note

AT&T is benefiting from solid traction in the wireless vertical and fiber broadband growth. Growing collaboration with industry leaders such as NVIDIA, Microsoft and Ericsson to drive innovation is a positive factor. Upward estimate revision shows growing investors’ optimism regarding the stock’s growth potential. However, stiff competition from other industry leaders, such as Verizon, T-Mobile and Charter, is straining margins. High debt burden makes it vulnerable to economic downturn and limits investment in growth initiatives. 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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