Why Is AT&T Stock Falling Despite Beating Third-Quarter Earnings Estimates?

Why did AT&T shares decline in pre-market trading?

AT&T Inc. (NYSE:T) shares fell 3.3% in pre-market trading on Wednesday following the release of its third-quarter 2026 financial results, despite the telecommunications company reporting earnings and revenue above Wall Street expectations.

The company also increased its full-year adjusted earnings guidance and maintained its free cash flow targets through 2028.

The share price decline came as investors assessed the quarterly results alongside AT&T’s updated financial outlook, capital investment plans and longer-term growth expectations.

How did AT&T perform in the third quarter?

AT&T reported adjusted earnings per share of $0.65, exceeding the analyst consensus estimate of $0.60 by $0.05.

Quarterly revenue reached $32.3 billion, compared with market expectations of $31.69 billion. The figure represented a 5.3% increase from the $30.7 billion recorded in the corresponding period of 2025.

Adjusted EBITDA rose 5.4% to $12.5 billion, compared with $11.9 billion a year earlier.

Free cash flow totalled $5.0 billion during the quarter, up from $4.9 billion in the prior-year period.

The results reflected revenue growth and higher adjusted operating profitability as the company continued expanding its wireless and internet services.

What drove AT&T’s customer growth?

AT&T added more than 1 million Advanced Connectivity customers for the second consecutive quarter, supported by demand for its fibre broadband, fixed wireless and mobile services.

The company reported 769,000 net internet customer additions, comprising 442,000 fibre connections and 327,000 fixed wireless customers.

It also added 379,000 postpaid phone customers on a net basis during the quarter.

Advanced Connectivity service revenue increased 6.1% year on year to $23.9 billion, while operating income in the segment rose 18.9% to $7.6 billion.

The figures showed growth across AT&T’s principal connectivity services, with both internet and wireless subscriptions contributing to the quarterly performance.

What did AT&T’s management say about the results?

John Stankey, AT&T’s Chairman and Chief Executive Officer, commented on the company’s customer acquisition performance and connectivity strategy.

“We are growing valuable customer relationships as more homes and businesses choose AT&T for all their advanced connectivity needs across both internet and on-the-go wireless,” Stankey said.

The company continues to focus on expanding its fibre broadband infrastructure and wireless services as part of its strategy to increase customer relationships across multiple connectivity products.

How has AT&T changed its 2026 earnings guidance?

AT&T raised its adjusted earnings per share outlook for 2026 to $2.40, exceeding the analyst consensus estimate of $2.34.

The updated forecast represents the midpoint of the company’s guidance and is consistent with its projection for a double-digit compound annual growth rate in adjusted earnings per share over the three years through 2028.

The company also reduced its longer-term capital investment outlook while maintaining its previously established free cash flow targets.

AT&T continues to expect free cash flow of at least $18 billion in 2026, increasing to at least $19 billion in 2027 and $21 billion in 2028.

For 2026, the company forecasts capital investment of between $23 billion and $24 billion.

How much capital is AT&T returning to shareholders?

AT&T returned approximately $4.8 billion to shareholders during the third quarter, including $2.8 billion through share repurchases.

The company also confirmed plans to maintain its annualised dividend of $1.11 per share.

The capital returns were supported by quarterly free cash flow of $5.0 billion.

AT&T’s financial plans continue to combine investment in telecommunications infrastructure with dividends and share buybacks.

What will investors be watching next?

Investors will be monitoring AT&T’s ability to sustain customer additions across fibre, fixed wireless and mobile services while meeting its updated earnings and cash flow targets.

The company’s revised capital investment outlook and plans to increase adjusted earnings through 2028 will also remain relevant to assessments of its financial performance.

Although third-quarter earnings and revenue exceeded expectations, AT&T’s 3.3% pre-market share price decline indicated a negative initial market reaction to the announcement.

AT&T stock price