AT&T 2Q26 EBITDA beats expectations with strong wireless momentum; Goldman Sachs maintains BUY but lowers price target to $30

Overview

This report provides Goldman Sachs' update on AT&T's 2Q26 results. AT&T reported revenue of $31.6bn, below Goldman Sachs/consensus expectations of $31.9bn/$31.7bn, but adjusted EBITDA of $12.34bn and free cash flow of $4.7bn both exceeded expectations. The core conclusion is that wireless business growth and cost improvements strengthen the conviction behind the BUY rating, while higher buyback guidance further supports EPS; however, declining broadband ARPU and peer valuation compression driven by satellite competition lead to a lower price target of $30 from $34.

Core views

Goldman Sachs is positive on AT&T's wireless momentum: wireless service revenue was $17.4bn, up 3.3% year over year, driven by 432k postpaid phone net additions, 1.7% year-over-year ARPU growth, lower churn, and lower upgrade rates. The company continues to advance its converged bundles, value customer, network investment, and cost savings initiatives, which are expected to improve customer stickiness and medium- to long-term growth. In broadband, fiber net additions of 367k exceeded expectations, but consumer fiber ARPU declined 1.3% year over year, reflecting short-term dilution from the convergence strategy. Fixed wireless net additions of 279k were broadly in line with expectations, but Goldman Sachs views its long-term strategic value as relatively limited.

Analysis framework

The report applies an earnings review, company guidance comparison, segment operating metric analysis, forecast revisions, and relative valuation framework. Core data are compared with Goldman Sachs estimates and Visible Alpha consensus, with separate assessments of wireless, fiber, fixed wireless, Legacy, and Business operations. Valuation uses an NTM+1Y EBITDA multiple, with the target multiple reduced from 7.0x to 6.5x to reflect peer valuation compression resulting from satellite competition concerns.

Methodology notes

• Earnings comparisonActual vs Goldman Sachs estimates vs consensus

  Compares AT&T's 2Q26 revenue, EBITDA, free cash flow, subscriber net additions, churn, and segment revenue item by item with Goldman Sachs and market consensus expectations.

  This method identifies the sources of earnings beats or misses and determines whether earnings estimates and rating views need to be adjusted.

• Valuation methodsEV/EBITDA multiple valuation

  The 12-month price target is based on a 6.5x NTM+1Y EBITDA multiple.

  Goldman Sachs maintains BUY, but lowers the target multiple from 7.0x to 6.5x as satellite competition concerns compress peer valuations.

• Institutional frameworkGS Factor Profile

  Compares the stock's characteristics relative to the market and industry peers across the Growth, Financial Returns, Multiple, and Integrated dimensions.

  The report presents this framework as an investment background tool, but the current rating is primarily driven by changes in earnings, guidance, forecasts, and valuation multiples.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• AT&T Inc. (T.N)

  Core covered stock

  Strengths

  Wireless service revenue growth, strong postpaid phone net additions, low churn, EBITDA and free cash flow beats, and higher buyback guidance.

  Weaknesses

  Total revenue below expectations, consumer fiber ARPU pressured by the convergence strategy, and continued decline in the Legacy business.

  Comparison

  2Q26 EBITDA and wireless subscriber metrics exceeded Goldman Sachs and consensus expectations; the target valuation multiple was reduced from 7.0x to 6.5x due to peer valuation compression.

  Risks

  Competition in fiber expansion markets, intensifying wireless competition, limited spectrum availability, and faster-than-expected deterioration in commercial wireline operations.

• Verizon Communications, T-Mobile US

  Wireless industry read-through peers

  Strengths

  AT&T's lower churn and lower upgrade rates may indicate reduced customer switching across the industry, benefiting the competitive environment for wireless operators.

  Weaknesses

  Industry growth may still be affected by price increases, device cycles, and competitive strategies.

  Comparison

  The report views AT&T's wireless performance as a positive signal for VZ/TMUS.

  Risks

  If promotional or device subsidy competition intensifies again, industry margin improvement could come under pressure.

• CHTR, CMCSA

  Broadband competition-affected stocks

  Strengths

  Not discussed as positive assets in this report.

  Weaknesses

  The decline in AT&T's consumer fiber ARPU indicates broadband competitive pressure, which could be unfavorable for cable broadband businesses.

  Comparison

  Goldman Sachs views signs of broadband competition as modestly negative for Charter and Comcast.

  Risks

  If telecom operators continue expanding fiber coverage and converged bundles, cable broadband pricing and customer retention could come under pressure.

• AMT, CCI, SBAC

  Potential beneficiaries of communications tower demand

  Strengths

  Mobile RAN investment to support agentic traffic could drive demand for tower infrastructure.

  Weaknesses

  The report does not provide specific financial forecast revisions for these companies.

  Comparison

  Goldman Sachs views AT&T's continued network investment as modestly positive for tower companies.

  Risks

  Changes in operator capital expenditure timing or delays in spectrum deployment could affect the pace at which demand materializes.

Key data

• 12-month price target$30.00Lowered from $34 previously; current price of $22.26 implies 34.8% upside.
• 2Q26 revenue$31.6bnBelow Goldman Sachs/consensus expectations of $31.9bn/$31.7bn.
• 2Q26 adjusted EBITDA$12.34bnAbove Goldman Sachs/consensus expectations of $12.13bn/$12.09bn.
• 2Q26 free cash flow$4.7bnAbove Goldman Sachs/consensus expectations of $4.2bn/$4.4bn.
• Wireless service revenue$17.4bnUp 3.3% year over year, above Goldman Sachs/consensus expectations of $17.3bn/$17.2bn.
• Postpaid phone net additions+432kAbove Goldman Sachs/market expectations of +412k/+343k.
• Postpaid phone churn0.86%Below Goldman Sachs/consensus expectations of 0.92%/0.90%.
• Fiber net additions+367kAbove Goldman Sachs/market expectations of +340k/+312k.
• 2026 stock buyback guidanceApproximately $10bnPreviously approximately $8bn.
• 2026 capital investment guidance$23bn-$24bnThe company reaffirmed this range.

Impact & implications

For AT&T, wireless subscriber growth, low churn, low upgrade rates, and cost savings improve earnings resilience and support Goldman Sachs' upward revisions to EBITDA and EPS estimates. For the industry, wireless performance is modestly positive for Verizon and T-Mobile US, as low churn and low upgrade rates may indicate stabilizing industry competition; declining consumer fiber ARPU is modestly negative for cable companies Charter and Comcast; continued mobile RAN investment is modestly positive for tower companies American Tower, Crown Castle, and SBA Communications.

Risks

• AT&T may face unexpected competition from new fiber players in multiple fiber expansion markets, resulting in materially lower-than-expected penetration.
• Consumer wireless competition could intensify, putting pressure on revenue and margins.
• Limited spectrum availability and insufficient US spectrum auctions could weaken market growth expectations.
• AT&T's commercial wireline business could deteriorate faster than Goldman Sachs expects.
• The threat of satellite competition leading to peer valuation multiple compression is an important reason for the price target reduction.

What to watch

• The impact of the August administrative fee increase and April price increases on existing plans on wireless ARPU and churn.
• Whether the Build-A-Plan and value customer strategies can continue driving postpaid phone net additions.
• Whether consumer fiber ARPU remains pressured by the convergence strategy and the pace of expansion in fiber serviceable coverage.
• The closing of the EchoStar spectrum transaction and the potential deployment schedule for upper C-band spectrum.
• Progress toward the $4bn annualized cost savings target by 2028, including vendor consolidation, AI efficiency gains, and digitization.
• The actual contribution to EPS and capital return targets after stock buybacks were raised from $8bn to $10bn.