As the Number of IoT Devices Starts to Surge, Verizon No Longer Relies on Traditional Subscriber Growth — VZ Stock Is Part of the AI Revolution’s Essential Nervous System

The publication of Verizon's (VZ) financial results for the first quarter of 2026 provided a set of data that demands much closer attention, going far beyond a superficial evaluation of revenue and net income. The fundamental statistics are solid. Earnings per share hit $1.28, reflecting stable profitability, and the company once again demonstrated an ability to generate massive free cash flow. Yet, the single most important number in this report was hidden deep within the operational metrics.

Postpaid phone net additions reached 55,000.

To grasp the significance of this figure, we need to look at industry specifics. Historically, the first quarter of the year is considered the classic churn season for major American wireless carriers. After the aggressive holiday sales at the end of the year, companies usually record a contraction of their subscriber base. Overcoming this trend and pushing into positive territory in the first quarter is a serious operational milestone for Verizon.

Here is the real kicker.

This result does not appear to be an isolated event or exclusively a corporate victory for one management team. If we analyze the financial and operational data for all of 2025 and early 2026, a clear, consistent pattern emerges across the entire industry. The entire Big Three of American telecom—Verizon, AT&T (T), and T-Mobile (TMUS)—are methodically and stably reporting the expansion of their subscriber bases. This synchronous, upward trajectory of user acquisition across the sector forms a highly curious mathematical paradox.

If every major player in the market simultaneously increases its client count, it means only one thing. The total addressable market is physically expanding. However, basic demographic analysis suggests that such an expansion should be practically impossible.

The Anomaly of Linear Logic: More Subscribers Than People 

In the fundamental valuation of telecommunications companies, traditional linear logic appears elementary and categorical. The total population serves as the absolute ceiling for the physical expansion of the market. Today, the population of the United States sits roughly around 345 to 350 million people. In the current technological epoch, smartphone penetration reached the stage of total saturation a long time ago. Practically every adult—along with a significant share of minors—already owns at least one mobile device.

According to this linear concept, the U.S. wireless market should represent a classic zero-sum game.

In an environment where demographic growth is minimal and unconnected people practically no longer exist, telecom giants physically cannot grow organically. Their entire business model should boil down to cannibalizing each other's client bases—an endless war of attrition and price battles to retain market share, which inevitably leads to margin dilution.

But the numbers don't lie. The hard numbers fundamentally refute this linear assumption.

Presently, the number of active mobile connections in the United States has already exceeded the 417 million mark. This means wireless penetration has pushed well past 120%. The subscriber bases of Verizon, AT&T, and T-Mobile are growing at paces that aggressively outstrip the natural demographic population growth of the country.

This anomaly exposes a critical flaw in how the telecom industry is traditionally measured and valued. The very essence of the "subscriber" metric has undergone a fundamental shift. The linear model no longer works because it relies on an outdated equation where one person equals one connection. The reality of 2026 is that the expansion of the wireless market has permanently decoupled from demographic indicators.

The Hidden Growth Engine: The Internet of Things and Machines Instead of People 

The key to solving this mathematical paradox lies in understanding who exactly—or rather, what exactly—is signing contracts with wireless carriers today. The expansion of the billing base is fueled by an explosive growth in the number of connection points, which already far outpaces the human population. The telecommunications industry is successfully monetizing the global transition of the physical world into a state of permanent network connectivity.

On the first level, new ecosystem habits of humans drive this growth. Fixed Wireless Access provides a massive impulse—home 5G internet that shows up in reporting as new connections. Beyond that, a single person today can easily generate multiple contracts. A personal smartphone, a work line, and separate eSIMs embedded in smartwatches and tablets.

But the true, underlying engine of exponential growth hides in an entirely different plane.

The Internet of Things and machine-to-machine systems. New vehicles rolling off the assembly lines of Tesla (TSLA), General Motors (GM), or Ford (F) today are effectively new, fully-fledged subscribers to the cellular network. They require constant data access for software updates, telemetry systems, and navigation. Similarly, millions of logistics containers, industrial sensors, smart city meters, and video surveillance systems require dedicated, albeit microscopic, data packages.

Looking into the near future, this segment of non-human subscribers will begin to scale at a frightening speed. A new generation of autonomous systems is incapable of functioning in an information vacuum. Drone-based delivery services, automated logistics hubs, and fleets of robotaxis desperately need a continuous connection with low latency to ensure basic traffic safety. As the mass production and deployment of humanoid and warehouse robots accelerate, every single unit will require a powerful, dedicated communication channel to process complex calculations via edge computing.

These machines, sensors, and algorithms are becoming the new premium class of consumers for the telecom industry.

They do not demand discounts. They do not switch carriers because of a flashy ad. And they generate an absolutely stable, round-the-clock demand for data transfer.

As a result, we are watching the wireless sector quietly but irreversibly mutate. It is morphing from a stagnating utility service providing human conversations into the indispensable nervous system of a rapidly automating physical world. And this expands the boundaries of their end market to scales that linear demography simply cannot describe.

The AI Effect: The Secondary Wave of the Tech Revolution Reaches Telecom 

To fully grasp the scale of the ongoing shift, we must view the development of artificial intelligence not as a static phenomenon but as a series of sequential technological waves. Each of these waves takes turns lifting entire sectors of the economy, forming new value creation chains.

The first wave focused exclusively on software, as the world witnessed the birth of large language models (LLMs) and breakthrough machine learning algorithms. The second, hardware wave followed, triggering unprecedented market cap growth for manufacturers of specialized chips and graphic processors required to train these models. The third wave, which we are observing right now, engulfed the peripheral infrastructure—cooling systems, power supply, and the construction of massive data centers.

Yet the logic of technological development is relentless.

Artificial intelligence cannot remain locked inside server racks forever. The next stage of evolution is AI’s expansion into the physical world. And right here is where the technological wave crashes into the telecommunications industry. Any autonomous device governed by artificial intelligence—be it a warehouse manipulator, a self-driving car, or a humanoid robot—is merely an end node of a complex system.

Without a continuous, high-speed, and reliable communication channel with low latency, these devices become blind and functionally useless. They are incapable of processing the entire array of visual and sensory data locally. They require a constant exchange of information with edge computing nodes. Thus, 5G cellular networks and future communication standards are becoming fundamental, absolutely vital infrastructure for the operation of AI in the real world.

Wireless operators are turning into the premier last-mile providers for machine intelligence.

Revaluation of Business Quality: Breaking Stereotypes and Multiple Expansion 

The current valuation of the wireless sector represents a striking example of market pricing inertia. If we look at the forward multiples of the entire Big Three, we will see that they trade with P/E ratios in the range of 10x to 12x. Such historically depressed metrics eloquently state that current quotes are priced in a scenario of zero prospects.

A P/E ratio of 10 is typically assigned to stagnating utilities, burdened with colossal debts from past capital expenditures and stuck in vicious price competition within an oversaturated market. Under the "connectivity only for humans" paradigm, such a valuation would be absolutely fair. There is nowhere to expand, and revenue can only grow by hiking tariffs to match inflation.

But operating data shows that the number of subscribers is growing, outpacing the population. The addressable market for telecoms has begun to physically expand through the integration of the Internet of Things and autonomous systems.

This signifies a fundamental change in the very quality of the business. Cellular companies are breaking out of the vicious cycle of demographic stagnation. They are gaining access to entirely new, previously nonexistent end markets with billions of potential connection points. The expansion of the billing and client base inevitably leads to a growth in high-margin revenue, since servicing machine-to-machine connections requires minimal additional costs against the backdrop of already built infrastructure.

In the financial world, a change in a company's growth profile inevitably triggers a rerating. A business that returns to a scaling trajectory cannot trade at the multiple of a stagnating enterprise for long. As revenue from IoT and autonomous systems begins to capture an increasingly noticeable share in the revenue structure of operators, the historical norm of multiples will have to shift upward. The transition of P/E from current levels to more fair values of 15x to 20x will create a colossal premium for those who manage to spot this structural shift in time.

Time to Look at the Industry Anew 

We stand on the threshold of an epoch where the number of network-connected autonomous devices, sensors, and machines will vastly outnumber the human population. Artificial intelligence is rewriting the rules, and its effective integration into the physical economy is impossible without a powerful, reliable, and ubiquitous communication system. The wave of the tech boom has already started lifting infrastructure sectors, and wireless operators sit right at the epicenter of this process.

They no longer need to claw fractions of a percent of market share from each other in a saturated smartphone market. An era of explosive growth in connection points is opening before them.

The bottom line is that this analysis does not serve as a direct investment recommendation or a call to immediately purchase specific securities. As objective observers relying exclusively on the logic of numbers and the development of technological chains, we are merely stating a fact. The fundamental picture in the U.S. telecommunications sector is shifting.

Considering the currently forming potential of new end markets, investors should take a highly attentive look at the wireless industry and the representatives of the Big Three. The revaluation of these companies from the category of value traps to the category of AI infrastructure beneficiaries could become one of the most logical and massive market moves in the coming years.