Goldman Sachs Initiates Telecom Coverage, Awards Buy Ratings

Telecom giants secure Goldman Sachs endorsement as infrastructure investments drive sector-wide transformation and market leadership

Key Takeaways

• Goldman Sachs initiates telecom coverage with three Buy ratings – AT&T receives $32 price target, T-Mobile $286, and Verizon $49 as firm identifies 2026 as pivotal year for sector transformation
• AT&T stock up 21% year-to-date with 4.1% dividend yield – Company plans $40 billion capital return program and targets 60 million fiber homes by 2030 with $3.5 billion infrastructure investment
• Cable operators face mounting pressure – Charter Communications and Altice USA receive Sell ratings due to broadband subscriber losses from fiber and wireless competition

Introduction

Goldman Sachs has launched comprehensive coverage of U.S. telecom and cable operators, signaling strong confidence in the sector’s transformation ahead of what analysts call a pivotal 2026. The investment bank awarded Buy ratings to three major telecom stocks while issuing Sell recommendations for two cable companies.

The coverage initiation reflects shifting competitive dynamics in consumer connectivity services. Goldman analysts expect the industry to move beyond traditional handset promotions toward convergence strategies, network modernization investments, and comprehensive bundled offerings.

Key Developments

Goldman Sachs analyst Michael Ng established coverage of AT&T with a Buy rating and $32 price target, marking a significant endorsement of the telecommunications giant’s strategic direction. The firm simultaneously initiated coverage on eight telecom and cable stocks, delivering a mixed assessment of industry prospects.

T-Mobile received the highest price target at $286, with analysts projecting the company will generate $20 billion in shareholder returns for 2026. The wireless carrier maintains its leadership position in postpaid phone additions while expanding broadband presence through fixed wireless and fiber partnerships.

Verizon earned what Goldman characterized as an “out-of-consensus” Buy rating with a $49 target. Analysts cite potential growth from reduced promotional pressures and possible synergies from the proposed Frontier acquisition, which could enable share repurchases not seen since 2015.

Market Impact

AT&T shares have surged 21% year-to-date, significantly outperforming broader market indices while offering investors a 4.1% dividend yield. The stock’s beta of 0.64 demonstrates lower volatility compared to market averages, reinforcing its appeal as a defensive investment.

The telecom sector benefits from institutional investor confidence, with fund managers maintaining a long/short ratio of 1.98 for U.S. technology, media, and telecom stocks. This represents rapid net buying activity as portfolio managers increase exposure to the sector’s stable cash flows and essential service characteristics.

Cable operators face contrasting market dynamics. Charter Communications and Altice USA both received Sell ratings, reflecting fundamental challenges from fiber and wireless competition that threaten traditional broadband business models.

Strategic Insights

Goldman’s analysis reveals a clear division between telecom winners and cable sector struggles. Telecom companies benefit from substantial fiber buildout investments and convergence strategies that position them advantageously against fragmented competition.

AT&T’s wireless business generates nearly 70% of company revenue, serving 73 million postpaid and 17 million prepaid customers across the nation’s third-largest wireless network. The company’s fiber expansion targets 4 million annual deployments by 2026, supporting ambitious growth projections.

Network modernization investments in spectrum acquisition and infrastructure development create competitive advantages that translate into premium service pricing. Companies demonstrating execution capability in these areas attract the strongest analyst support and institutional investment flows.

Expert Opinions and Data

Goldman analysts express confidence that leading telecom companies’ strategic investments will yield “industry-leading EBITDA growth, free cash flow conversion, and shareholder capital returns.” This assessment reflects detailed analysis of capital allocation effectiveness across the sector.

Recent analyst activity supports Goldman’s optimistic outlook. JP Morgan raised AT&T’s price target from $31 to $33 while maintaining an Overweight rating, according to Investing.com. Raymond James increased its Strong Buy target from $30 to $31, while Morgan Stanley lifted its Overweight target to $32.

AT&T’s second-quarter results demonstrate operational momentum with $30.8 billion in revenues and $4.9 billion net income. Free cash flow increased to $4.4 billion from $4.0 billion year-over-year, while mobility service revenue grew 3.5% and postpaid phone average revenue per user expanded 1.1%.

Wall Street consensus among 27 analysts establishes an average AT&T price target of $29.47, ranging from $19 to $34. The current brokerage recommendation averages 2.1 on a five-point scale, indicating “Outperform” status across 30 participating firms.

Conclusion

Goldman Sachs’ coverage initiation establishes clear sector leadership expectations, with telecom operators positioned to capitalize on infrastructure investments and service convergence trends. AT&T’s projected 9% free cash flow compound annual growth rate through 2029 supports accelerated capital return programs that enhance shareholder value propositions.

The firm’s selective approach distinguishes between telecom companies executing successful fiber and 5G strategies versus cable operators struggling with competitive pressures. This analysis framework provides investors with actionable insights for navigating the sector’s transformation through 2026 and beyond.