This was a recovery week for the Fab Five (+$368 billion) thanks in part the Supreme Court’s tariff ruling. Four of the Fab Five were up 1% or more on Friday (Microsoft fell marginally). With these moves, Google is now positive for 2026 with Apple (-3%) and Meta (-1%) close behind. Amazon rallied $124 billion over the last week driven by consumer spending and tariff news.
The Telco Top Five did not fare as well, with T-Mobile taking the largest hit this week. Four of the Telco Top Five are up double digits YTD, however, as investors take a second look at last mile distribution as a more lucrative and less risky AI infrastructure play. Of particular interest is the fact that Verizon has now crept ahead of AT&T by $11 billion. Both trail T-Mobile’s market cap of $237 billion.
Many of you have asked for our (now belated) thoughts on Sampath’s departure from Verizon. We thought he was a good leader who (we are told) engaged many teammates in strategy formulation. He was a terrific analyst (few also make superior leaders) who learned fast. Our guess (only that) was that Sampath saw substantive changes to Verizon’s marketing and sales that were not driven by him and markedly different from the original “grow ARPU/ARPA” tactics (heavy sponsorship, heavy national advertising, exclusive bundled add-on offers, etc.).
As we said in the previous brief (here), Dan Schulman’s focus will be on converting single-product customers to converged customers (specifically fiber or FWA + wireless). That’s the focus. We agree that with Frontier closed, the time is right for a marketing rethink.
Verizon’s CEO made the following comment in his opening remarks (transcript here):
“Beyond these internal (personalized offer) efforts, we are unlocking new revenue streams by reimagining our existing assets, leveraging our deep fiber footprint and distributed network facilities to enable AI at scale for our enterprise customers, including hyperscalers.”
No real follow ups to that particular quote on the earnings call. Perhaps Verizon is marketing their One Fiber assets that they deployed in 2019-2023 (that local fiber is highly underutilized) to certain hyperscalers who want to have an end-to-end experience. If they can strike a deal that would allow them to materially monetize and expand their copper-to-fiber conversion iniatives, the result would be highly accretive to Big Red.
On a macroexonomic note, both the Q4 GDP (+1.4% – here) and the PCE inflation numbers (here) were disappointing. The only comfort (?) in these numbers is that growth without the government shutdown would have been 1.0-1.4% higher. But the government was shut down, and federal employee backpay was treated as a “pay raise” per the notes. Q1 is traditionally the weakest quarter of the year, and the 3.1% current estimate seems low given private sector job growth (which we discussed in last week’s full Brief was +172,000 in January).
Bottom line: We think it’s important to think about the economy with two lenses: a) geographic (wide variances – we discussed last week) and b) private vs total growth. Rapid change often has unintended consequences, and we think that there will be many such consequences as the current administration adjusts its fiscal policy.
Full file is below. Please send comments to [email protected]. See you at Metro Connect in Ft. Lauderdale this Mon-Tues if you are attending!
