Verizon Communications (VZ) shares rose on Friday after the telecom giant unveiled a new AI-centric expansion plan that captured market attention.
In its second-quarter results, Verizon added 184,000 postpaid phone subscriber lines, with growth in postpaid accounts targeting high-value consumers posting its best second-quarter performance in five years. Meanwhile, the company added 348,000 broadband subscribers, including 193,000 fixed wireless users and 155,000 fiber customers.
The earnings report showed that Verizon’s adjusted earnings per share rose 6.6% to $1.30. Operating cash flow and free cash flow surged 16.3% and 24.4%, respectively, reaching $10.4 billion and $6.4 billion.
Buoyed by these solid results, Verizon raised its full-year financial forecast. Management expects adjusted earnings per share to grow 6% to 7% in 2026, landing between $4.99 and $5.04.
In a subsequent conference call with analysts, CEO Dan Schulman revealed that the company recently signed an agreement with Alphabet’s Google valued at over $1 billion. The search giant will lease Verizon’s “dark fiber”—unused fiber infrastructure—to connect its AI data centers.
Schulman said the partnership with Google is “just the beginning” and indicated that the company expects to announce more deals before year-end. He added that these transactions are collectively projected to generate billions of dollars in revenue over the next several years.
Dark Fiber Asset Value Comes Into Focus
Dark fiber refers to optical cables leased by customers who “light” them using their own equipment, providing dedicated bandwidth between data centers. Demand for such capacity is currently being driven by the deepest-pocketed customers in the market—tech companies that are building out AI data centers at massive scale.
Schulman emphasized that Verizon’s low-latency fiber network has become a critical infrastructure asset in high demand for AI data centers. Management clearly wants investors to see a turning point for the company. In the earnings release, he stated: “Our core connectivity business is gaining momentum, and with the emergence of AI infrastructure revenue, we are fundamentally reshaping Verizon’s growth trajectory.”
However, a sense of proportion is warranted given the overall revenue scale. Verizon’s total second-quarter revenue was $34.3 billion, so a dark fiber deal worth over $1 billion spread over multiple years still represents a relatively small portion. That said, it is worth noting that the company’s enterprise business segment, which had struggled with sluggish growth for years, posted only a 2.6% year-over-year revenue increase to $7.2 billion this quarter, but operating profit in that segment jumped 37%. If multi-billion-dollar long-term fiber contracts materialize gradually, they will undoubtedly inject much-needed growth momentum into the enterprise segment for the first time in years.
For income-oriented investors, the most critical metric remains cash flow. In the first half of 2026, Verizon generated $10.2 billion in free cash flow, up 16% year over year, while dividends paid during the period totaled $5.9 billion, representing less than 60% of free cash flow, leaving ample room for debt repayment and share repurchases.
Management has raised its full-year guidance for two consecutive quarters, projecting free cash flow growth of 9% to 10% and adjusted earnings per share between $4.99 and $5.04. Second-quarter adjusted EBITDA reached $13.7 billion, up 7.2% year over year, setting a new company record.
Subscriber growth trends also support these projections. In the second quarter, mobile service and broadband service revenues grew 2.8% year over year, and management expects growth to approach 3% in the third quarter and approximately 4% in the fourth quarter, showing accelerating sequential momentum.
Of course, Verizon remains a low-growth enterprise overall. Due to lower equipment upgrade volumes and the company’s reduction in equipment subsidies, equipment revenue declined sharply by nearly 20%, dragging total revenue down 0.7% year over year. Earnings per share fell 22% due to special items—the largest being a $746 million loss from classifying its international wireline and managed network services business as held for sale—but adjusted earnings per share actually grew 6.6%.
For investors seeking steady income, holding the stock at current levels offers a certain degree of appeal.
