For years, AT&T has been viewed primarily as a defensive telecom stock: stable cash flows, a generous dividend, and limited growth. That perception is now being challenged. Comments from management during the company’s latest earnings call suggest that AT&T’s multi-year investment cycle is reaching an inflection point, with fiber-optic broadband positioned to deliver growth-like earnings momentum into 2026 and beyond.

Fiber Moves From Cost Center to Growth Engine

The strategic shift centers on fiber. After several years of heavy capital spending, including a $5.8 billion acquisition of key fiber assets from Lumen Technologies, AT&T is approaching scale where returns begin to matter. Chief Executive John Stankey said the company expects to reach more than 40 million customer locations with fiber by the end of this year, up from 32 million at the end of 2025. That represents a roughly 25% expansion in footprint within a single year.

While fiber still accounts for less than 15% of total revenue, its economics are meaningfully different from AT&T’s core wireless business, which generates about 70% of sales but operates in a saturated U.S. market. Wireless growth is increasingly dependent on pricing and promotions, whereas fiber offers a clearer path to subscriber expansion.

Subscriber Math Starts to Matter

AT&T’s fiber penetration rate is strikingly consistent. Roughly 40% of households passed by its fiber network ultimately subscribe. Applying that ratio to an additional 8 million locations implies more than 3 million incremental customers over time. That would lift AT&T’s fiber subscriber base from about 10.6 million to roughly 13.6 million, a nearly 30% increase.

The revenue implications are material. With average fiber customers paying around $73 per month, those incremental subscribers translate into close to $3 billion in annualized revenue. More importantly, fiber margins tend to improve as networks scale, meaning a disproportionate share of that revenue can flow to earnings.

Management Signals a Shift in Earnings Trajectory

The impact of fiber is now visible in guidance. Chief Financial Officer Pascal Desroches told investors that AT&T expects adjusted earnings per share in the $2.25 to $2.35 range in 2026 and projected a double-digit compound annual growth rate in EPS through 2028. For a company long associated with low-single-digit growth, that language represents a notable change in tone.

Consensus estimates still point to growth just north of 10% annually, suggesting the market remains cautious. That caution reflects execution risk and the reality that wireless will continue to dominate AT&T’s financial profile. Still, even low-double-digit growth would be impressive for a telecom operating in a mature industry.

Dividend Implications Strengthen the Bull Case

For income-focused investors, the fiber-driven earnings outlook carries an additional benefit. AT&T’s payout ratio sits slightly above 50%, leaving a healthy buffer. Accelerating earnings growth improves dividend safety and may reopen the door to annual dividend increases, which were paused in 2022. While management has not committed to hikes, improving fundamentals make the prospect more credible.

What to Watch Going Forward

The next phase hinges on execution. Fiber buildout timelines, subscriber uptake, and margin expansion will determine whether management’s confidence is justified. If AT&T delivers on its fiber ambitions, the company may begin to look less like a slow-moving utility and more like a re-rated cash-flow compounder.