A dividend stock that Wall Street left for dead just posted its best consumer quarter in five years. It also signed a billion-dollar deal to wire artificial intelligence. Verizon AI infrastructure is now the story management wants investors to focus on, a growth engine hiding inside a utility.
Verizon trades near $45, yields about 6.5%, and has raised its dividend for 21 straight years. The bet management is making is that its old fiber and central-office network, built for a different era, is now the exact infrastructure the AI boom needs. A turnaround under CEO Dan Schulman is meant to turn stability into growth. This analysis weighs the evidence from a pivotal second quarter, and it fits alongside our coverage of the competitive threats reshaping US telecom.
The Quarter That Signaled an Inflection
Verizon’s second-quarter 2026 results, reported July 24, showed a genuine operating turn beneath a soft revenue headline.
Operating revenue was $34.3 billion, down 0.7% from a year earlier, and it missed analyst expectations near $36 billion. The cause was a sharp drop in equipment sales. Customers held phones longer, and Verizon trimmed device subsidies. But the profitable core accelerated. Mobility and broadband service revenue rose 2.8% to roughly $23.4 billion, adjusted earnings reached $1.30 per share, up 6.6%, and adjusted EBITDA hit a record $13.7 billion at a 40.1% margin.
| Verizon Q2 2026 metric | Result |
|---|---|
| Operating revenue | $34.3 billion, down 0.7% |
| Service revenue (mobility and broadband) | ~$23.4 billion, up 2.8% |
| Adjusted EPS | $1.30, up 6.6% |
| Adjusted EBITDA | $13.7 billion, record 40.1% margin |
| Net income | $3.9 billion, down 22.9% |
| Free cash flow | $6.4 billion, up 24% |
One number demands caution. Net income fell 22.9% to $3.9 billion, dragged down by $1.8 billion of pre-tax special items, including a $746 million loss on a disposition, $258 million of asset rationalization, and $397 million of severance. That gap between rising adjusted profit and falling reported profit reflects the cost of restructuring, and investors should not ignore it.
Subscribers and the Raised Guidance
The clearest proof of the turnaround is in customer growth, which had long been Verizon’s weak spot.
The company added 184,000 retail postpaid phone subscribers, a swing of 193,000 from a loss a year earlier. Consumer postpaid phone net additions were the best in five years, and gross additions were the strongest in eight. Broadband added 348,000 connections. Across the first half, postpaid phone net additions rose 537,000 versus the prior year. Management credited steadily falling churn rather than aggressive promotions, a notable contrast with the price war pressuring rivals like T-Mobile.
Guidance Raised for a Second Straight Quarter
That momentum prompted Verizon to raise full-year 2026 guidance again. It lifted the adjusted EPS range to $4.99 to $5.04, implying 6% to 7% growth, raised service-revenue growth guidance to 2.5% to 3.0%, and increased free-cash-flow growth guidance to 9% to 10%. Underpinning the earnings gains is an aggressive cost-transformation program targeting roughly $9 billion in combined operational and capital savings. Verizon completed $3.5 billion of buybacks in the first half and raised its full-year repurchase target to up to $4.5 billion, while reaffirming capital spending of $16.0 billion to $16.5 billion.
The Google Deal and Verizon AI Infrastructure
Here is the strategic centerpiece, and the reason Verizon is suddenly discussed as an AI play.
Verizon signed a dark-fiber agreement with Google worth more than $1 billion. Under it, Google leases unlit fiber strands and attaches its own optical equipment, gaining end-to-end control of high-capacity links between data centers without digging new trenches. Verizon monetizes idle fiber with minimal added operating cost. The deal anchors a new business Verizon brands AI Connect, built on its existing fiber network and central-office real estate to carry the low-latency traffic that AI clusters demand. It is the connectivity layer beneath the same buildout driving data-center power and cooling demand.
| Verizon AI infrastructure asset | Role |
|---|---|
| Dark fiber leases | Sell unlit capacity to hyperscalers like Google |
| Central-office footprint | Convert legacy sites toward edge and inference use |
| Existing fiber backbone | Low-latency transport between data-center campuses |
Why the Timing Caveat Matters
The framing is what makes it compelling. Schulman told investors, “We built that infrastructure for a different era, but it has turned out to be exactly the right asset for this one.” Management has also signaled that additional multibillion-dollar contracts could follow by year-end, as hyperscalers race to secure transport between expanding campuses, the same demand lifting AI cloud providers. The important caveat: management expects Verizon AI infrastructure revenue to begin contributing meaningfully only in 2027. It is a 2027 story, not a 2026 earnings driver.
The BT Joint Venture
Verizon is also reshaping its international enterprise business through a large cross-border deal.
On June 29, 2026, Verizon and Britain’s BT Group agreed to combine their international operations into a 50:50 joint venture. It merges BT International with Verizon’s international enterprise wireline arm. The new company will serve more than 3,000 multinational customers across more than 180 countries, with roughly $4 billion in combined annual revenue. Verizon will pay BT a $625 million equalization payment, both parents will hold equal voting rights, and Martijn Blanken has been named CEO-designate. The transaction is expected to close in 2027, subject to regulatory clearances.
| BT joint venture term | Detail |
|---|---|
| Structure | 50:50 joint venture, equal voting |
| Scope | 3,000+ customers, 180+ countries |
| Combined revenue | ~$4 billion annually |
| Equalization payment | $625 million from Verizon to BT |
| Expected close | 2027 |
The logic is scale and sovereignty. Multinationals increasingly demand secure connectivity that respects local data rules, and a single global platform serves them more efficiently than two subscale units. It also lets each parent refocus on its home market.
Federal Defense and Connected Vehicles
Two enterprise verticals round out the growth story, one in government, one in automotive.
On the federal side, Verizon is an awardee on the US Navy’s Spiral 4 wireless contract vehicle, a multiple-award program worth up to $2.67 billion over ten years that also serves the broader Department of Defense. It provides secure voice, data, IoT, and mobility management, and deploys private 5G networks for defense customers. Heightened geopolitical tension has increased demand for resilient, sovereign communications, and Verizon’s federal public-sector business is positioned to capture it.
BMW and the 5G Standalone Milestone
On the automotive side, Verizon and Japan’s KDDI announced in July 2026 that Verizon will provide connectivity for all newly manufactured BMW Group vehicles in the United States, including BMW and MINI. These are the first cars on Verizon’s nationwide 5G Standalone for Connected Vehicles offering, running on a dedicated 5G core built to 3GPP Release 16 standards. KDDI’s Global Communications Platform manages the data, and the Release 16 architecture enables network slicing for latency-sensitive telematics. It is the commercial payoff for the standards work driving vendors like Nokia.
Valuation and the Dividend Question
For most Verizon investors, the stock is about income, and the numbers frame a clear bull-bear debate.
Verizon trades near $45, at roughly 10.7 times earnings, a steep discount to the broader market. It yields about 6.5% and has raised its dividend for 21 consecutive years, making it a core income holding. The shares sit about 13% below their 52-week high of $51.68 but well above the $38.39 low. Free cash flow of $6.4 billion in the quarter, up 24%, comfortably covers the dividend. Net unsecured debt stands at 2.5 times adjusted EBITDA, with total unsecured debt reduced to $136.5 billion.
The bull case is a cheap, high-yield stock with improving operations and a free option on Verizon AI infrastructure. The bear case is that revenue still shrank, the heavy debt load limits flexibility, competition from T-Mobile and AT&T is fierce, and the fiber upside is years away and unproven.
The Risks That Matter
- Revenue still declining. Total revenue fell 0.7%, and service-revenue growth is modest; the top line has not inflected.
- Heavy debt. Total unsecured debt of $136.5 billion at 2.5 times EBITDA limits flexibility in a higher-for-longer rate world.
- AI revenue is a 2027 story. Verizon AI infrastructure contributes meaningfully only next year, so today’s price discounts unproven future income.
- Intense competition. T-Mobile and AT&T are aggressive on both wireless and fiber, pressuring pricing and net adds.
- Restructuring charges. Special items cut reported net income 22.9%, and further charges could recur during the turnaround.
- Deal execution. The BT joint venture and Google build-out both depend on 2027 closings and clean execution.
- Dividend scrutiny. A 6.5% yield signals the market’s doubt about growth; any free-cash-flow stumble would put the payout under a microscope.
Closing Thoughts
Verizon delivered the most convincing quarter of its turnaround, and the pieces of a credible new story are now visible. Subscriber growth returned without discounting, cash flow surged, guidance rose for a second straight quarter, and a billion-dollar Google deal reframed the company’s fiber as an AI asset. The BT joint venture and the Spiral 4 and BMW mandates add steady enterprise annuities around that core.
The verdict rests on one question: will Verizon AI infrastructure convert into real 2027 revenue, or is this simply a cheap, high-yield telco that got a good quarter? Watch the markers into 2027: whether service revenue keeps accelerating toward the promised 4% by year-end, whether AI Connect signs the additional multibillion-dollar contracts management expects, whether free cash flow keeps covering the dividend comfortably, and whether the BT and Google deals close on schedule. For income investors, the covered 6.5% yield is the reason to own it today. The AI pivot is the reason to keep watching.
Verizon Long (Buy)
Enter At: 47.01
T.P_1: 49.00
T.P_2: 51.45
T.P_3: 53.73
T.P_4: 56.88
T.P_5: 59.53
T.P_6: 63.19
S.L: 40.61
