Core Thesis - Dycom Industries, Inc. is facing significant risks due to its reliance on telecom wireline capital expenditures and is trading at peak multiples that suggest durable growth, despite being at the end of a decade-long FTTH buildout cycle [2][5] Revenue Growth and Market Penetration - Revenue growth over the past five years has been primarily driven by FTTH expansion and minor mergers and acquisitions, with market penetration reaching 42% of total possible homes and expected to exceed 50% by early 2026 [2] - The FTTH capex cycle is projected to peak around 2026-2027, after which wireline spending will decelerate, leading to a decline in maintenance revenues as fiber's lower upkeep costs reduce the total addressable market for Dycom's legacy services [2] Customer Concentration and Revenue Risks - The company is heavily reliant on a few major telecom clients, with over 66% of revenue concentrated among five customers, which introduces potential margin pressure and earnings volatility [3] - Dycom's reported $8 billion backlog is considered misleading as it overstates revenue visibility, and its recurring service and maintenance revenue is closely tied to new FTTH deployments, which will decline as legacy wireline assets are phased out [3] Competitive Landscape and External Pressures - Competitive threats from fixed wireless access (FWA) and low Earth orbit (LEO) satellite internet are putting pressure on average revenue per user (ARPU) and limiting cost-per-passing upside [4] - Federal BEAD funding is unlikely to provide meaningful benefits to Dycom, and any potential advantages could accelerate market saturation [4] - The company is poorly positioned relative to competitors in the AI datacenter fiber builds due to a lack of power and long-haul expertise [4] Valuation and Investment Risks - The combination of declining FTTH growth, customer concentration, and margin compression suggests significant downside risk for Dycom, with a normalized multiple of 12x EV/EBIT indicating a potential ~57% downside [5] - Current valuations imply that the stock is viewed as a durable infrastructure provider, but the end of the FTTH cycle and secular pressures indicate that Dycom is structurally overvalued, posing high risks to equity investors [5]