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AI Investment Gains Prominence: 3 Telecom Stocks in Focus


With the telecom industry on the cusp of 5G boom, President Trump has renewed an investment pledge to prioritize research and development efforts in Artificial Intelligence (AI) — a key differentiator to analyze huge data troves to get meaningful information. The strategic move follows similar such initiatives by other countries such as China to bridge the digital divide with the United States in this field.

Trump has signed an executive order in this regard to maintain the competitive edge of the country. Dubbed the American AI Initiative, the plan involves significant investments to seek the application of AI technology in diverse fields ranging from wars to health care. It also aims to make government data and computing resources widely available to AI experts for possible data mining activities for the overall benefit of the industry.

AI: A Key Differentiator

With the wide proliferation of smartphones and exponential growth in demand for data traffic, telecom operators have to deal with a huge pool of heterogeneous data originating from various web and mobile applications that traces geolocation, consumer profile data, call detail record, service usage and billing data. The burgeoning customer digital footprint leaves behind a huge data trail, which is time consuming and seemingly impossible to analyze by humans for data collation. This is where AI techniques come into play. Telecom enterprises are increasingly deploying these tools to predict and analyze consumer behavior on real-time basis, which can then be tapped by marketing agencies and retailers to fast-track their sales.

AI facilitates telecom enterprises to dig deeper into the customer realm and predict the propensity of customers to buy products through holistic profiling. It helps to get a cognitive insight into customer behavior, thus helping to better connect with them and customize an offering for higher probability of acceptance. At the same time, data monetization and data mining techniques by leveraging subscribers’ data could help unearth new revenue opportunities for the company. In addition, AI enables telecom operators to deploy intelligent networks using tools that automate back-end processes to lower costs and deploy additional human capital for other value-added analytical work.

The Money Trail: What Stokes Investments?

In addition to classification of traffic, anomaly detection and network optimization and utilization, AI along with Machine Learning (ML) techniques conflate to form the basis of numerous intelligent technologies that have redefined our daily lives. A few of these developments that affect the usage of telecom networks substantially are:

Smart Homes: AI has given shape to the concept of Smart Homes that help remote monitoring and management of Internet-connected appliances and systems, such as lighting and heating. This provides homeowners security, comfort, convenience and energy efficiency by allowing them to control smart devices through a smartphone app or other networked device.
Self-Driving Cars: The growing autonomous vehicle fleet is a testament to the fact that driverless vehicles are getting closer to being a common feature on public roads. This requires seamless data connectivity and AI to control vehicle speed according to road traffic and sensitive areas to prevent any road casualties.
Smart Cities: Improving the quality of life for residents of the city, reducing environmental impact and increasing operational efficiency are three prime factors that have led to the evolution of Smart Cities. The essence of a Smart City is connectivity, where embedded telecom infrastructure works as a mesh in which data flows seamlessly and enables tasks with the least human intervention in the smartest possible way.

Telecom Stocks in the Limelight

AT&T Inc. T: This Zacks Rank #3 (Hold) stock is focusing on AI and ML techniques to automate operations such as common call center procedures, and to analyze and correct network outages. AT&T is using AI to help make the global network more secure, self-healing and self-resilient. The company is also utilizing AI tools to improve traffic flow and manage the rapid growth of video traffic on mobile networks as it moves toward 5G technology.

Windstream Holdings, Inc. WIN: Since Windstream embraced SD-WAN (software-defined wide-area network), it has been able to dovetail into AI. This Zacks Ranks #3 stock has utilized SD-WAN Concierge to enable customers set their own routing policies, based on what SLAs (service level agreements) are more important to their unique business needs. The company is providing customers unprecedented network visibility and control, such as identifying which applications are using the most bandwidth, and prioritizing how that needs to change in order to meet business and customer experience objectives.

Verizon Communications Inc. VZ: Verizon is reportedly using its predictive analytics and ML algorithms to monitor 3GB of data every second streaming from millions of network interfaces — from customers’ routers to an array of sensors gathering operational data. The strategy has been designed to be customer-focused from the ground up in order to reduce customer dissatisfaction and ensure prompt service. On its home networks, Verizon runs automated testing on a sample of 60,000 in-home routers every two hours in order to ensure optimum speed of data connectivity. The strategy is increasingly important for the company as it moves toward the goal of deploying mobile 5G networks across the country. Verizon currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moving Forward

Although the American AI Initiative lacks clarity regarding the funding details and the quantum of investment, it has set the ball rolling for continued thrusts and focus on R&D efforts to thwart competition. It remains to be seen whether such concerted efforts by the Trump administration trickle down to the bottom rung of the industry for its overall development.

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