The tech world has seen a raft of changes in the past decade, starting with the rollout of 5G networks on a nationwide scale and continuing with today’s boom in generative AI. These technologies have impacted every technology segment, in ways that are still unfolding. The banking giant Goldman Sachs has taken a deep dive into the ways that these changes are reverberating within tech’s telecom segment and has come to some interesting conclusions.
First, the bank notes that 5G’s main contribution was to expand the area of competition. It hasn’t been the advertised world-changer, but it has broadened the area of access to online networks – putting more customers within reach of the telecom companies, especially for wireless networking providers. Second, AI has created a voracious appetite for data center services, which in their turn rely on broadband connections and networking – creating openings for network providers. Additionally, AI technology promises to boost efficiency across the board.
Looking at the bigger picture, Goldman’s James Schneider says, “We believe the US telecom industry is in a state of transformation. US telecom operators have refocused on their core business, after having emerged from a period as conglomerates marked by shareholder capital destruction. For the first time in a decade, we see the US wireless operators entering a period where both competitive intensity and capital intensity are moderating simultaneously. We see this backdrop driving healthier growth and margin dynamics, with potential for significant capital returns and stock re-rating.”
We’ve used the TipRanks platform to look up the broader view on 2 names that the Goldman Sachs expert has tapped as ‘leading the charge’ in the telecom industry. These are well-known companies, and according to the analyst consensus, both boast Buy ratings. Here are the details.
Verizon Communications, Inc. (VZ)
We’ll start with Verizon Communications, whose old tag line ‘Can you hear me now?’ has become a meme. Verizon is one of the largest firms in the US telecom…
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