Can VZ's Thrust on Cybersecurity, Gen AI Applications Aid the Stock?

Verizon Communications Inc. VZ recently augmented cybersecurity measures for larger mid-sized businesses with the launch of the Trusted Connection solution. This Zero Trust Network Access (ZTNA) service combines networking and security services into an integrated secure access offering that fortifies the connection and endpoints from any user device to any digital resource.With cloud-centric security capabilities, Trusted Connection facilitates safe access to websites, software-as-a-service (SaaS) applications and private applications by securing the data flowing between users and cloud applications. Its seamless network-native security offers a huge step forward in functionality and control and significantly reduces potential attacks by encrypting paths between the cloud and the endpoint.VZ Focusing on GenAI Applications in 5G NetworkIn addition to bolstering cybersecurity firewalls, Verizon is leveraging its private Mobile Edge Compute (MEC) technology to drive digital transformation and fuel innovation across business enterprises worldwide. The company has collaborated with NVIDIA Corporation NVDA to power real-time Generative AI (artificial intelligence) applications over its 5G private network. The combination of Verizon’s private On Site 5G and private 5G Edge with NVIDIA AI Enterprise software platform will enable enterprises to unlock the power of 5G and mobile edge computing with greater operational efficiency.The 5G edge compute ecosystem enables enterprises to benefit from a private network and edge compute infrastructure on-premise. It allows customers to manage a range of devices while providing highly secure connectivity for real-time AI applications requiring safety, ultra-low latency and high bandwidth.The new AI-powered solution, developed by combining Verizon and NVIDIA infrastructure, is designed to be a plug-and-play for seamless connectivity. In addition to superfast speed, the solution can accommodate future evolutions in AI computing while supporting multi-tenancy for multiple use cases. This modular solution can also be scaled with ease. It can be operated remotely via portable private network solutions or on a customer’s premise with a permanent private network on-site for faster decision-making with local processing and inferencing.The stack is designed to effectively handle compute-intensive apps, including Generative AI Large Language Models and Vision Language Models, Video streaming, broadcast management, Computer Vision, Augmented/Virtual/Extended Reality, Autonomous Mobile Robot/ Automated Guided Vehicle and IoT. The integrated ecosystem approach is likely to help clients define the right models and architecture to deliver their desired outcomes.Wireless Traction Lends Support to VZWith one of the most efficient wireless networks in the United States, Verizon delivers faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and steady infrastructure investments. The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These include massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells.Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum with premium unlimited plans. The telecom giant plans to accelerate the availability of its 5G Ultra Wideband network across the country. The company’s growth strategy includes 5G mobility, nationwide broadband and mobile edge compute and business solutions.High Infrastructure Upgrade Costs Erode VZ MarginsDespite solid wireless traction, the company’s wireline division is struggling with persistent losses in access lines due to competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. Moreover, to expand its customer base, Verizon is spending heavily on promotion and offering lucrative discounts, which are weighing on margins.VZ also recorded high capital expenditures to support the launch and continued build-out of its 5G Ultra Wideband network, deployment of significant fiber assets across the country and upgrade to Intelligent Edge Network architecture. The company has splurged in the C-Band auction, which is offering airwaves in the 3.7 gigahertz-to-4.2 gigahertz area of spectrum to acquire key mid-band spectrum for potential 5G deployments in the next few years. Unless the high auctioning expenses are justified, margins are likely to be compromised significantly.The company operates in a competitive and almost saturated U.S. wireless market. Spectrum crunch has become a major issue in the U.S. telecom industry. Most carriers are finding it increasingly challenging to manage mobile data traffic and video streaming demand, which is growing by leaps and bounds.  In addition, Verizon is facing a steady decline in legacy services. The company registered 60,000 Fios Video net losses in the fourth quarter of 2024, reflecting the ongoing shift from traditional linear video to over-the-top offerings. Image Source: Zacks Investment ResearchPrice Performance of VZVZ has gained 7.1% over the past year compared with the industry’s growth of 36.4%, lagging peers like AT&T Inc. T and T-Mobile US Inc. TMUS.One-Year VZ Stock Price Performance Image Source: Zacks Investment ResearchEstimate Revision Trend of VZEarnings estimates for Verizon for 2025 have declined 0.8% to $4.68 over the past year, while the same for 2026 has decreased 1.2% to $4.86. This portrays bearish sentiments for the stock. Image Source: Zacks Investment ResearchEnd NoteBy investing steadily in infrastructure and pioneering new technologies, Verizon is well-positioned to bridge the digital divide and enhance the connectivity landscape nationwide. This is likely to translate into solid subscriber growth, higher average revenue per user and increased broadband and fiber penetration.However, a saturated wireless market and price wars owing to competitive pressure have eroded its profitability. The marginal downtrend in estimate revisions further portrays skepticism about the stock’s growth potential. With a Zacks Rank #3 (Hold), Verizon appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AT&T Inc. (T): Free Stock Analysis Report Verizon Communications Inc. (VZ): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report T-Mobile US, Inc. (TMUS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks