U.S. telecom stocks are showing signs of stabilization after a volatile period, with Bernstein identifying AT&T as the top sector pick based on its fiber expansion and bundled service strategy.
The U.S. telecom sector posted net additions of roughly 250,000 more postpaid phone subscribers in the second quarter of 2026 compared with the same period last year, according to Bernstein. The improvement follows elevated churn levels in 2025, which were linked to the expiration of 36-month device contracts. Contributing factors include stable subsidies, reduced device switching, fewer price hikes, and increased adoption of broadband bundles.
Average revenue per account trends remain mixed. T-Mobile reported a 3.7% year-over-year increase, while AT&T saw a 2.2% rise. Verizon, however, posted a decline due to rolled-back price increases aimed at driving subscriber growth. Broadband performance improved overall, though fixed wireless access additions declined as providers shifted focus toward fiber deployments.
AT&T was singled out by Bernstein for its low exposure to fixed wireless access, which shields it from satellite competition. The company's fiber business serves as a sustainable growth driver, while bundled fiber and mobility offerings support wireless subscriber acquisition. In its second-quarter results, AT&T reported adjusted earnings of $0.65 per share, exceeding forecasts, and received an upgrade to Outperform from Wolfe Research. The firm also expanded its use of D-Wave's quantum computing technology.
Verizon received a constructive near-term outlook from Bernstein, citing effective cost savings that enable volume-driven strategies without margin erosion. The company's $1.30 per share adjusted earnings in the second quarter topped estimates, and it raised its 2026 guidance for service revenue and free cash flow. Following the results, Scotiabank and Bernstein SocGen raised their price targets for Verizon.
The sector's rebound reflects broader trends, including declining churn and divergent ARPA performance, as carriers navigate shifting consumer preferences and competitive pressures.
