With only one Fab Five company reporting earnings last week, it’s hard to attribute the decline in capitalization (-$720 billion this week for the Fab Five) to a single down report. Alphabet’s net cash provided by operating activities was $84.9 billion for the first six months of the year, up 33% or $21 billion from H1 2025 (debt and marketable securities issuances rose by $25.8 billion and capex rose $41.0 billion). The company continues to have negative net debt.
We attribute fears of the accelerated of AI-related capital spending to the decline in values. Alphabet increased their 2026 capital spending range to $195-$210 billion, up $15 billion from the Q1 estimate ($1 billion of this is for fiber purchases from Verizon, announced by CEO Dan Schulman on their earnings call). We do not think that Alphabet will be the only provider increasing their capex estimates through the end of the year.
Based on the operating lease commitments and capital expenditures, our estimate is that the Feb Five AI investors (all the companies except for Apple) will see cash-on-cash returns within seven years of investment (better than C-Band spectrum and Fiber to the Home or FTTH). We cannot make the same claim for non-Fab Five companies, but the core operating after-tax cash flows should reasonably pay for capital expenditures
The Telco Top Five posted a cumulative $8 billion gain after each company reported earnings. We will be devoting the next two Briefs to earnings analysis but think our “one word” summaries hit the mark (especially “churn” for Verizon). We thought that the market punished T-Mobile too severely for their earnings report, especially with the additional color provided on the earnings call. The stock bounced back a bit on Friday and is now tied with Verizon for largest market capitalization.
Cable continued to have good momentum on wireless with Comcast adding 448 thousand subscribers and Charter/ Spectrum adding 406 thousand. We estimate 906 thousand including Altice which would be on par with 2Q 2025 and 2Q 2024. Using 2.3 lines per home penetrated (a stat we will revisit in 3Q 2026), Comcast has 8.6% passings penetration while Spectrum has 10.6%. The trailing 12-month view of cable net additions is 1.66 million for Comcast vs 1.68 million for Spectrum.
The remaining earnings calendar is as follows:
File is below. We will dive deeper into earnings in next Sunday’s Brief. Telecom momentum has shifted to Verizon and AT&T (the two largest FTTH providers in the USA) and away from T-Mobile and cable. We will discuss the reasons behind this shift next week and in additional Briefs.
Have a terrific weekend!
