Investors often have a choice that breaks down between growth stocks and value plays. Right now, the soaring demand for AI technology is giving many slow-growth companies some unexpected kickers. That includes utilities, but can also include companies related to hardware, software, and connectivity.
Investors can likely see above-average returns playing to this trend in the years ahead. And more old-school companies may offer consistent returns rather than the big jumps and drops of a growth play.
For instance, telecom giant
AT&T (T) is looking to grow itself as the leading wireless 5G and fiber connectivity company. That should place them in a strong position with the rise of mobile AI technology, which is still in its early stages.
Plus, AT&T’s commitment to stock buybacks and dividends can likely ensure that investors are well compensated in the years ahead.
Currently, AT&T pays a 4.9% dividend, and they’re committing $40 billion over the next four years for dividends and buybacks.
Action to take: Even with the pop higher on the news, AT&T trades at just 10 times forward earnings. Shares are inexpensive enough to see a further rally from here, especially with more cash flows going to share buybacks. Investors may like the stock as a value play with some momentum behind it.
For traders, if shares can break higher from here, they should keep trending higher. The April 2025 $25 calls, last trading for about $0.68, could see mid-to-high double-digit returns depending on the strength of any rally.
Disclosure: The author of this article has a position in the company mentioned here, but does not intend to trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.