Everything you need to know about US stocks in the communications services sector

Why are US stocks in the communications services sector interesting?

As you may know, the communications services sector encompasses a wide range of different activities, ranging from telecommunications (mobile services, 5G,...) to traditional media (television, radio,...).This sector is undeniably undergoing transformation.

With digitalization and 5G that continue to emerge, the way we interact with content is just as fast evolving. According to Future Market Insights, the global telecommunications services market is expected to reach about $2,200 billion in 2025! In addition to a compound annual growth rate (or CAGR if you prefer) of 6.4% until 2035. With such numbers, this shows the growing importance of this sector in the global economy.

Investing in US stocks in this sector allows you to diversify your portfolio and gain access to companies that are quite well-known. For example, companies such as Verizon and AT&T, which dominate the market, offer some stability, generating constant income flows, even in times of economic uncertainty.

Moreover, we must not forget the streaming market, with giants such as Netflix and Disney+. According to Precedence Research, the global video streaming market is expected to reach 157.71 billion dollars by the end of 2025. And with projected growth at a compound annual rate of 20.90% until 2034.

A few words about telecommunications companies

So you will understand this: the communications services sector plays more than a fundamental role in the modern economy. According to the GICS classification (one of the ways to classify businesses by sector), this sector is mainly divided into two segments: telecommunications and media/distortion.

Telecommunications companies, such as Verizon and AT&T, provide (1) mobile telephony, and (2) high-speed internet. If you look at your daily consumption in more detail, you will quickly realize how crucial they are. On the other hand, media and entertainment companies, such as Netflix and Disney, are transforming the way we consume information. If you're over 20, you probably remember when we had to go to a store to rent a movie. Today, that's (happily/unfortunately) over.

Major players in the United States include giants such as Alphabet (Google's parent company), Meta (formerly Facebook) and many others. I am also discussing these giants in the following section.

Note that you can also find these companies in the technology sector. Their activity is quite large, so this will often be the case with these large companies.

The main companies to know

I realize that I have already mentioned them several times, so let's sum up the main companies in this sector in a few points:

1. Alphabet (Google): In addition to their famous search engine (Google for those who did not understand), Alphabet excels in services such as Google Cloud. Their progress in artificial intelligence and automation is just as impressive, positioning Alphabet as a leader in digital transformation. With a market capitalization of over $2,000 billion (yes, these are the right numbers), they are essential for anyone interested in US stocks in the communications services sector.

2. Meta: Meta, the parent company of Facebook and Instagram, is not content to be a giant of social networks. They multiply innovations and invest massively in metavers (this famous digital world) and AI.

3. Netflix and Disney: In 2025 Netflix had 301.6 million subscribers and generated a turnover of $39 billion in 2024, making it a leader in the video streaming sector. On the other hand, Disney+ is equally impressive. It recorded 124.6 million subscribers in the first quarter of 2025, with an annual revenue of $10.4 billion for 2024 (despite a slight decrease in the number of subscribers). They both invest heavily in the production of original content, which, you will understand, attracts a lot of people.

4. Verizon and AT&T: By 2025, Verizon had 146.1 million mobile subscribers and AT&T had 118.2 million mobile subscribers. If not enough, they had revenues of $134.8 billion and $122.3 billion respectively in 2024, which explains their place as pillars of modern connectivity. Their investment in 5G technologies and high-speed internet solutions is more than important given our current consumption.

As I mentioned earlier, it is important to point out that many of these companies, including Alphabet and Meta, are also investing in technology. It is therefore not uncommon to find them in many different sectors.

Does US stocks in the communications services sector merit your investment?

Even in 2025, with topics such as artificial intelligence that seem to be taking full attention, companies in the communications services sector are constantly evolving. Especially in the era of 5G networks that change our way of communicating and consuming content.

The major companies I mentioned earlier, such as Alphabet and Meta, are well established with impressive stock market capitalizations. In August 2025, Alphabet's market capitalization reached $2,472 billion, while Meta's capitalization amounted to $1,973 billion (I had to check these numbers twice as far as they seemed aberrant to me). These technology giants continue to dominate their markets with one key point: constant innovation. These figures highlight the enormous potential for growth, especially in the areas of digital advertising and social networks.

Other telecommunications companies, such as Verizon and AT&T, offer recurring subscription revenues. In 2024, Verizon generated approximately $134.8 billion in revenues. Which is pretty good, no? Diversifying with stocks in this sector can therefore reduce your exposure to risk, while increasing your yield potential of course.

Opportunities and risks to be taken into account

As our society continues to demand a growing digitalization, difficult not to mention the increased dependence on digital services. Problem for some, opportunity for others. Indeed, this makes this market strong and stable, and above all, it continues to grow.

The rapid deployment of 5G networks revolutionizes communications, allowing download speeds up to 100 times faster than 4G! It is therefore a real lever for streaming services, augmented reality, but also the Internet of Things (IoT). This creates new sources of revenue for businesses, and new opportunities for you and me.

However, we must remain vigilant at a minimum. These opportunities, as always, are accompanied by significant risks. The increasing regulation of digital giants, with increasingly strict rules, can hinder the growth of certain companies (such as Google and Facebook) that are under the scrutiny of the legislators. Sometimes fines also hurt them very much.

Moreover, competition in the streaming market, where major players such as Netflix and Disney+ compete with subscribers, may reduce profit margins. They all offer a wide range of content, and this is where it becomes delicate: in 2022, Netflix reported a significant loss of subscribers, for the first time in more than ten years! Nothing scary, but it shows how no one really has the monopoly of the market.

And finally, the high indebtedness of some companies, particularly in the telecommunications sector, poses an additional threat. AT&T, for example, recorded a debt of $143.59 billion on the balance sheet in March 2025. In addition to being worrying, this could hinder its future development.

Practical advice on this sector

Okay, all this information is very good, but in practice, how does that work? To maximize your chances of success with US stocks in the communications services sector, I offer you some practical tips to consider:

1. Pay attention to the financial strength and level of corporate debt: Before investing, look at the key financial data. A very low debt ratio is often a good sign of solidity. In addition, monitor the cash flow available. A robust company should have a positive cash flow, showing its ability to invest in its growth.

2. Following regulatory and technological trends: Federal Communications Commission (FCC) decisions can clearly change the situation. The emergence of technologies, as with 5G for example, also transforms our content consumption.

3. Compare the valuation of enterprises in the sector with others: Use known ratios such as the price/benefit ratio (P/E). If the average P/E of the communication stocks is 18, but some have a P/E of 15, this could (technically) indicate an opportunity to purchase.

4. Progressively investing: Investing fixed amounts at regular intervals can smooth the cost of entry. If you want to invest $1,000, investing $250 each month for four months can reduce the impact of market fluctuations. And after all, investing is a marathon, not a sprint.

The word of the end

As you will have understood, the communications services sector deserves your full attention. With a combination of growth opportunities but also a fairly good stability, this area is a key pillar in diversifying your US stocks portfolio.

However, remain vigilant enough, it is unfortunately not a risk-free sector (none of them really are anyway). Regular monitoring of market developments is very important, so don't forget to keep up-to-date, but at least you know a little more about the US stocks in the communications services sector.