Verizon Lands $1B+ Google Dark-Fiber Deal for AI Data Centers
TL;DR
- Schulman called AI infrastructure 'one of the largest capital cycles of our lifetime,' directly repricing Verizon's dormant fiber assets on the earnings call.
- The Google deal lifted Verizon's 2026 guidance: adjusted EPS to $4.99-$5.04 and free cash flow growth to 9-10%, improving dividend coverage ratio.
- Verizon's AI Connect suite, launched January 2025, retrofits central offices as edge inference nodes, extending revenue beyond inter-datacenter dark fiber contracts.
There is a quieter story inside the AI capex boom, and it is about which legacy plumbing companies get to bill for it. Verizon's disclosure this week that it has signed a deal worth more than $1 billion with Google to light up dark fiber between Google's data centers is one of the cleanest examples so far, reported by Reuters off the carrier's Q2 earnings call.
CEO Dan Schulman disclosed the contract and said further agreements expected before year-end could generate multiple billions of dollars in revenue over the next several years. Verizon nudged its 2026 adjusted EPS guidance to $4.99 to $5.04, up from $4.95 to $4.99, and lifted full-year EPS growth guidance to 6 to 7 percent from 4 to 5 percent. Dark fiber matters here because it is installed fiber-optic infrastructure the customer operates with its own networking gear, which gives a hyperscaler dedicated capacity and control over network design rather than a managed telecom service.
The context on the other side of the trade is Alphabet's capex line. Google's parent raised 2026 capital-expenditure guidance to between $195 billion and $205 billion, up from $180 billion to $190 billion, with most of that pointed at servers, data centers and networking equipment. Alphabet also reported roughly $5.9 billion of negative free cash flow in the second quarter, its first negative quarter since going public in 2004, per CNBC's coverage. Fiber is a small share of that spend, but a real one, and the reporting notes AI data center designs use roughly 36 times more fiber-optic cable than traditional ones.
Neither company disclosed the deal's duration, geographic scope or deployment schedule, so 'more than $1 billion' could recognize over many years, and Verizon's pipeline of 'multiple billions' remains a forward projection tied to hyperscaler capex cycles. Take Schulman's revenue framing as guidance from a CEO on an earnings call, not a signed multi-year contract book.
The other tier-one US carriers with dormant long-haul fiber, and the fiber-optic vendors above them, are the next candidates for the same repricing before year-end. If Verizon lands even one more hyperscaler out of Microsoft, Meta or Amazon on similar terms, the sleepy telecom side of the AI trade stops being sleepy.
What others are reporting
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Quartz Read →
Leads with Schulman's 'largest capital cycles' framing, positioning dormant fiber as an AI-era strategic asset with years of hyperscaler demand ahead.
The build out of AI infrastructure across the United States is one of the largest capital cycles of our lifetime.
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The Motley Fool Read →
Focuses on dividend sustainability: H1 FCF of $10.2B easily covered $5.9B in dividends, shifting the narrative from dividend risk to dividend growth.
Our core connectivity business is gaining momentum, and with the emergence of AI infrastructure revenue, we are fundamentally reshaping Verizon's growth trajectory.
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PYMNTS Read →
Details Verizon's AI Connect product suite and retrofitted central offices as edge inference nodes, with Google Cloud and Meta already named adopters.
The build-out of AI infrastructure across the United States is one of the largest capital cycles of our lifetime.
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Simply Wall St. Read →
Applies a $51.90 fair value estimate and flags high debt as a counterweight, offering a risk-adjusted valuation take beyond the deal announcement.
The dark fiber agreement with Google, valued at more than US$1 billion, is the most relevant recent announcement here.
Originally reported by reuters.com
Read the original article →Original headline: Verizon Signs $1B+ Google Dark-Fiber Deal to Wire AI Data Centers, Says 'Multiple Billions' More Coming