Happy New Year from Cedar Rapids (IA), Fraser (CO), and Kansas City (MO). Here’s to an uncomfortably fast pace in 2026! After some market commentary and one additional thought about events that shaped 2025, we look at this year’s Consumer Electronics Show (link here) which officially starts on Tuesday and ends on Friday. While we won’t be attending this year’s event, many of you will be there and have requested an unbiased preview.
While it’s a few weeks away, we thought it would be good to let you know that we will be attending this year’s Metro Connect show in Ft Lauderdale from February 23-25 (additional details here). Knowing that many of The Sunday Brief readers also attend this show, we would like to gauge interest in a small social gathering on Feb 22nd. If you are attending, and would like to explore a casual get together, let us know at [email protected] and we would be glad to set one up.
The Fortnight That Was
Note: 2025 performance does include the first trading day of 2026. The new year charts will be corrected and included in the files distributed with next week’s interim Brief.
There wasn’t a Santa Claus rally for the Fab Five or the Telco Top Five this year. The Fab Five are now worth a cumulative $15.4 trillion, a $9.3 trillion (150%) increase over the last three years. The Telco Top Five are now worth $703 billion, a $36 billion (5%) increase over the last three years.
The stocks that comprise the Fab Five and the Telco Top Five are not moving in tandem. In 2026, thanks in large part to an early September court ruling allowing them to keep the Chrome product with additional conditions, Google created $1.5 trillion in value. Up to that point, Google had added a mere $281 billion in 2026 value. After the ruling (and a positive 3Q earnings report), the stock shot up and kept rising through December (see nearby 6-month chart showing GOOG’s 60% rise over the last six months vs. the S&P Index 14% rise).
The same “second half” theme can be applied to Apple. For most of the year, the news had been glum with executives departing, Apple AI rumors swirling, and anxiety building. Along came the iPhone 17 and the expiration of 36-month equipment installment plans. With increased promotional activity and willingness to spend on smartphone upgrades, the iPhone 17 selling season wasn’t a repeat of 2024. As we have chronicled in our iPhone availability posts (latest is here), it took about six weeks longer in 2025 to reach general availability for the iPhone 17 Pro, and there yet remain some color/ size shortages with the iPhone 17 Pro Max (although the base version, which we estimate to make up 50-55% of total iPhone Pro Max sales, has had general availability since early December). Apple’s 2025 equity losses kissed the $1 trillion mark in April due to tariff concerns and remained above $700 billion throughout July. It wasn’t until the last week of September (2+ weeks after the iPhone 17 series launch) that AAPL turned positive for the year. While 8% is not a banner year for the equity, the company is still valued (slightly) above $4 trillion thanks to the iPhone 17.
Amazon was the Fab Five laggard this year, driven mostly by trade and tariff policy anxiousness. There have been many concerns about retail spending in Amazon’s core business (the delay of release of government data didn’t help – latest is here), as well as elevated levels of AI infrastructure spending (even though Amazon continues to have $43 billion in negative net debt as of Sept 30). If a second round of tariffs is not imminent (it would be political suicide to do that in front of the midterm elections), then year-over-year comparables should be great for them starting in 2Q 2026.
The Telco Top Five have not had a lot of good value creation news to report this year. We have chronicled AT&T’s recovery in several Briefs, so an 8% gain combined with a 4.5% dividend yield should not come as a surprise. Verizon has languished for the last several years (see table above), ending just about at the same place it was at the end of 2022 (with all price appreciation coming from a 6-7% dividend yield). The Board finally put their foot down after September’s results came in weaker than expected; long-time Board member Dan Schulman took over and promptly laid off 13,000 employees. Verizon was aggressive across most segments (but especially with their “iPhone 17 Pro on Us” for up to four lines Holiday promotion) and we expect them to not only beat estimates, but to have an arsenal of market share-taking programs to sustain net additions throughout 2026.
Both Comcast and Charter suffered extensive losses in the second half of 2025 (as of July 3rd, Charter was actually up $11 billion for the year and Comcast was down a mere $6 billion) as concerns about DOCSIS competitiveness versus fiber mounted (see our Jully 27 Brief on this topic here). Comcast is hinting that greater structural changes may be in the offing as they seek to restore shareholder confidence (since the end of 2022, the stock is down 15% while T is up 33% and TMUS is up 43%). Charter is merging with Cox. As we enter 2026, the bright spot for cable (mobile growth) is under attack by their underlying network provider. Despite this uncertainty, we think cable has a very good asset and could emerge the winner in many parts of the country, but it will take time and patience.
This leaves T-Mobile, who had a spectacular value creating year in 2024 (+$71 billion or 39%). Still the value (and now the network) leader, it would not surprise us to see the them grow retail postpaid phone additions faster than their peers when fourth quarter results are announced. They will continue to be a market share winner. Whether the EBITDA growth from their continued expansion into secondary and tertiary markets (including the US Cellular acquisition) will be able to offset increased competitive pressures from Verizon and AT&T is the question they need to answer on their earnings call. If the results are at the high end of expectations, we would not be surprised to see a pre-release around CES next week.
Bottom line: The underlying economy should be very strong for the ten stocks we track – business spending should be robust, and tariff volatility should be a 2025 (and not a 2026) event. A decisive legislative sweep leading to political gridlock in 2027 and 2028 might be a good thing (we have no crystal ball when it comes to politics, so your guess is as good as ours). It should be a good if not great year for service providers and communications companies even with increased competitive pressures and infrastructure investment uncertainty.
CES 2026 Preview – Agentic, Adoption, and Advantage
We have written many columns about the Consumer Electronics Show over the last fifteen years. Last year, our column “AI Helps but Does Not Remake the Consumer Electronics Industry” turned out to be very true (our prediction that Apple would seize and maintain a competitive lead has not come to fruition, however). This year, everyone is assuming that what Artificial Intelligence features that can be baked in are already in place. And, as we have discussed in many columns, no AI effort begins without quality data, and many companies are finally realizing that the rest of AI gets a lot easier when the (data) fuel is purest.
Agentic AI is going to be an overused phrase at CES this year. We are highly skeptical of agentic applications bearing fruit in 2026 except in very limited circumstances. One example where we think agentic AI will take hold is in company recruiting. Resumes will be scanned based on pre-defined rules, and agentic systems can quickly weed out applicants who do not meet the recruiting criteria. Outside of this and perhaps simple IT Help desk functions (like password resets), we think that agentic AI will be used to describe a host of activities that occur (or could have occurred) without the presence of any unique AI infrastructure.
In the consumer space, agentic AI could be manifested in the following phrase “Because you watched _______, we recorded ________.” This is low cost/ low risk task as recording has minimal (or zero) cost. The more relevant question, however, is “Where did you watch it?” For example, was the viewing content on YouTube, and the recording on Amazon Prime Video (currently not capable because data is not shared between those systems)? This is a very simple example that highlights the interoperability issues that have and will continue to limit effectiveness even if consumers provide their consent to analyze data across platforms.
Simply put, agentic AI has hurdles – systems that do not communicate well (if at all) with each other, instructions that cannot be recognized by the receiving system even if interoperability is present, and legacy hurdles such as copyrighted content, trade secrets, and patent innovations. Agentic AI will begin by prompting users with choices (e.g., record related movies across all of my streaming services), leaving consumers to grant permission (and eventually releasing the agent to perform this each time in the future).
AI adoption is also being carefully watched. This is more than tracking how many paid users exist for a particular platform (see the nearby chart for Google Gemini’s estimate of the largest paying platforms in use today). Anthropic’s Claude Pro is noted for its ability to perform deep analysis in a short amount of time. Canva’s presentation development platform integrates multiple AI tools (including their own). OpenAI Chat GPT is known for their image generation capability. These are three entirely separate use cases which can easily make the case for using multiple tools. At $100/ user per month, the productivity case is easy for a marketing department to justify. Competition will drive the need for many if not all major players to react (think about the adoption of an AI technique across local automobile dealerships – any change will be matched within hours or days).
What’s interesting is how Microsoft and Google will position their Gemini and Copilot products to compete against a product like Canva or Anthropic. Google AI Pro already incorporates much of the Google 1 storage and Google Home features (creating a $10/ mo. AI “adder” for existing Google 1 customers) – details here. Microsoft is rolling out Copilot as an inexpensive (or, in the case of many enterprise accounts, included) feature for enterprise customers. In these cases, AI increases adoption of an existing subscription.
AI has driven many companies (including CellSite Solutions) to examine their data management policies and practices more carefully. Organizing data is like cleaning one’s room (or office): a little organization each day meaningfully improves productivity. To the extent that AI initiatives result in better “housecleaning” and understanding which pieces of data are critical for solving problems (and which pieces are extraneous), the better.
The result of a better data strategy is the creation of competitive advantage. We see this impacting businesses in several ways:
- The ability to accurately schedule shifts and manage resources
- The ability to prioritize and/or re-sequence workflows to drive higher cash flows
- The ability to improve logistics using multiple (and potentially varying) criteria
- The ability to improve communication with customers and suppliers
- The ability to quickly analyze project and production risks by product or customer
Competitive advantage has often been described as “delivering the highest value to the largest number of customers at the lowest cost.” Policy and system limitations are often at odds with interoperable solutions. Our view is that those companies that reorganize their data to drive productivity and reduce project or process variability will win.
To do this requires extensive data gathering and assembly. We think that the greatest winners here will be companies who can quickly assess product and materials alternatives with high accuracy, and pool together primary (in-house) and third-party histories to quickly provide and assess alternatives. Reputation backed by recommendation will become increasingly important as businesses look beyond claims and attempt to source the best solutions.
What do the concepts of agentic, adoption, and advantage mean for consumers? Everything from maintaining a healthy diet to improving everyday habits to increasing family communication to development of hobbies in retirement. Just as we saw in the early days of smartphone development (which has been forgotten by many of the early advocates), an “open” movement will emerge to drive interoperability. At the same time, data integrity will need to be wrapped in privacy. These topics do not grab many headlines at a show like CES, but are definitely being explored by product and service departments across the globe.
Bottom line: Like the development of the Internet, Cloud, and smartphone applications, AI improvements will go through fits and starts. Large companies will provide integrator functions, and start-ups will reinvent large company products and services. Our view is that AI, like the advent of personal computing, is a multi-decade evolution, which should drive the conversation at many future CES events.
We will begin to tackle Q1 earnings themes in our next Brief. In the meantime, if you have friends who are interested in being notified each time we publish a Brief, please have them sign up at www.sundaybrief.com.
Go Chiefs and Davidson College Basketball!
Important disclosure: The opinions expressed in The Sunday Brief are those of Jim Patterson and Patterson Advisory Group, LLC, and do not reflect those of CellSite Solutions, LLC, or Fort Point Capital.
