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Verizon beat Q3 2026 profit estimates, raised guidance a third time and signed a $2 billion-plus AWS AI deal, but a revenue miss left shares mixed premarket.
- Adjusted EPS of $1.31 beat estimates; revenue of $34.3 billion fell short of the roughly $34.8 billion consensus.
- 2026 guidance was raised for the third time: adjusted EPS growth of 7.0% to 7.5% and 1.1 million to 1.2 million postpaid phone adds.
- Verizon signed an agreement worth more than $2 billion to connect Amazon Web Services data centers for AI workloads.
Lead
Verizon Communications (NYSE: VZ) reported third-quarter 2026 adjusted earnings of $1.31 per share on Monday, up 8.3% from a year earlier and above the roughly $1.28 consensus. The company raised its full-year outlook for the third consecutive quarter. It also announced a commercial agreement worth more than $2 billion with Amazon Web Services, the cloud unit of Amazon (NASDAQ: AMZN), to support AI infrastructure. Revenue rose 1.5% to $34.3 billion, below expectations of about $34.8 billion, and net income increased 5.2% to $5.3 billion.What Did Verizon Report for Q3 2026?
Verizon reported a profit beat and a record customer quarter, offset by a revenue shortfall. Consolidated adjusted EBITDA, a measure of operating profit before interest, taxes and depreciation, rose 8.0% to a record $13.8 billion, slightly above the $13.73 billion consensus. Free cash flow climbed 12.1% to $7.8 billion, the strongest quarterly figure since 2020.
Subscriber trends drove the improvement. Postpaid phone net additions reached 406,000, the best third quarter in five years and nearly double the roughly 209,000 expected. Postpaid net account additions of 137,000 were the highest in more than a decade. Postpaid phone churn, the rate at which customers leave, improved 4 basis points to 0.94%.
Broadband added 314,000 connections, split between 159,000 fixed wireless and 155,000 fiber. Service revenue rose 2.9% to $23.5 billion.
CEO Dan Schulman said the company "delivered another record-breaking quarter" and is "fundamentally stronger" one year into its transformation.
How Much Did Verizon Raise Its 2026 Guidance?
Verizon lifted every major customer and cash flow target except capital spending. The postpaid phone net addition forecast rose to 1.1 million to 1.2 million from 750,000 to 1.0 million. Adjusted EPS growth is now expected at 7.0% to 7.5%, up from 6.0% to 7.0%, equal to $5.04 to $5.06 per share against a prior range of $4.99 to $5.04.
Free cash flow growth is now projected at about 12%, from 9% to 10%. Operating cash flow growth was lifted to 3.5% to 5% from 2% to 4%. Capital expenditure guidance of $16.0 billion to $16.5 billion was unchanged.
What Is in the AWS AI Infrastructure Deal?
The agreement is a commercial framework worth more than $2 billion in which Verizon supplies high-capacity fiber-optic connectivity to AWS data centers. The links are designed to speed data transfers for increasingly intensive AI computing workloads, and the framework covers distributed compute infrastructure.
The deal follows a July agreement worth more than $1 billion to provide dark fiber, unlit fiber leased to a customer, between Google (NASDAQ: GOOG) data centers. Together, the contracts position Verizon's network as a supplier of AI capacity to hyperscalers, a revenue stream distinct from consumer wireless. It also reflects a pattern in which carriers monetize fiber assets as AI traffic grows.
Why Did Verizon Shares Slip Premarket?
Verizon shares traded lower in premarket trading because the revenue miss outweighed the earnings beat and raised outlook. Revenue came in about $500 million below consensus, and early moves were uneven as the stock reacted to the mix of results. The shares had gained more than 10% year to date before the report.
The broader tape was firmer. Dow futures rose 0.31%, S&P 500 futures gained 0.26% and Nasdaq 100 futures added 0.21%. A revival in ai stocks, helped by Anthropic's IPO filing, lifted sentiment ahead of big-tech earnings and a Federal Reserve decision later this week. That left Verizon's premarket reaction mixed against a rising market.
Strategic Context
Verizon's report supports a turnaround story built on lower churn and stronger account growth rather than top-line expansion. Record margins and cash flow give the company room to fund its network while holding capital spending flat. The AWS contract adds a high-value enterprise channel at a time when fiber demand is tied to data center construction.
The revenue shortfall shows the limits of that approach. Service revenue grew 2.9%, but total revenue growth of 1.5% reflects weaker equipment-related sales and leaves the company dependent on subscriber gains and cost control to deliver earnings growth.
Outlook
Verizon enters the final quarter with raised targets for subscribers, earnings and cash flow, and a new AI connectivity contract that diversifies revenue. The market's focus will shift to whether the 1.1 million to 1.2 million postpaid phone add target holds through the holiday period and whether revenue growth catches up with profit growth. Further hyperscaler fiber agreements would extend the AI infrastructure narrative begun with the Google and AWS deals.
