Telecomm ETFs in Focus After VZ & T's Q2 Earnings Beat

Industry Overview - The telecom sector demonstrated strong performance over the past year, with the S&P Telecom Select Industry Index gaining over 40%, significantly outperforming the S&P 500, which rose by 22% [1] - The positive outlook for the sector is supported by optimistic AI forecasts and expectations of interest rate cuts, influenced by President Trump's advocacy for lower rates [1] Verizon Communications - Verizon reported strong second-quarter 2025 results, with adjusted earnings of $1.22 per share, up from $1.15 in the prior year, beating the Zacks Consensus Estimate by 4 cents [3][4] - Total operating revenues increased by 5.2% to $34.5 billion, driven by growth in service revenues and higher wireless equipment revenues, surpassing the consensus estimate of $33.58 billion [4] - For 2025, Verizon anticipates wireless service revenue growth of 2%-2.8%, adjusted EBITDA growth of 2.5%-3.5%, and adjusted earnings growth of 1%-3%, with cash flow projected at $37-$39 billion and capital expenditure estimated at $17.5-$18.5 billion [5] AT&T - AT&T also reported strong second-quarter 2025 results, with adjusted earnings rising to 54 cents per share from 51 cents a year ago, exceeding the Zacks Consensus Estimate by 3 cents [6][7] - GAAP operating revenues increased by 3.5% year over year to $30.85 billion, primarily due to higher Mobility service and equipment sales, beating the consensus mark of $30.53 billion [8] - The company is focused on investing in key areas such as 5G and fiber, while adjusting its business strategy to adapt to market changes for long-term growth [7] ETFs in Focus - Several exchange-traded funds (ETFs) provide exposure to the U.S. telecom industry, including: - Vanguard Communication Services ETF (VOX), with AT&T at 4.3% and Verizon at 4%, gaining 3.4% over the past month [10] - Fidelity MSCI Communication Services Index ETF (FCOM), with 4.2% exposure to AT&T and 4% to Verizon, adding 3.5% over the past month [11] - iShares U.S. Telecommunications ETF (IYZ), with approximately 14% exposure to AT&T and 13% to Verizon, increasing by 1.3% over the past month [12] - SPDR S&P Telecom ETF (XTL), with 3.6% exposure to AT&T and 3.56% to Verizon, gaining 6.8% over the past month [13]