American Tower: Raising the Bar Amid a Data Center Inflection and a Pivot to Developed Markets

A second guidance raise, record CoreSite leasing, and an APAC exit mark a strategic inflection — but AFFO headwinds linger.

AMT · Earnings Call · 2026-07-28

American Tower’s second-quarter 2026 results showed a company executing with precision: revenue growth accelerating, a record quarter at CoreSite, and a deliberate exit from Asia-Pacific. The company raised its full-year outlook for the second time, citing data center outperformance, broad-based tower leasing, and FX tailwinds. But the market remains skeptical, with the stock still down over 40% from its 2021 peak and flat over the past 90 days. The question is whether this is a genuine inflection or just another quarter of steady execution in a sector the market has punished.

The Catalyst Menu

CEO Steve Vondran laid out a rare, explicit roadmap for the next decade of tower growth: the capacity phase of 5G, a new spectrum deployment cycle starting with the Upper C band in 2027, the eventual 6G transition, and the accelerating emergence of AI applications.

For the first time in several years, we see a path to 4 major catalysts creating multiple overlapping demand drivers that could support network investment well into the next decade.
Steven Vondran, President and CEO · 2026-07-28

This is a deliberate attempt to reset the narrative: towers are not a sunset asset but a core beneficiary of the AI-driven data deluge. The company is already seeing more colocations, a shift from amendments, and a densification phase beginning. “Using the Internet to move petabytes of data is just not practical. And that's why people come to CoreSite is to be natively co-located with their cloud providers with their inferencing providers.” — Steven Vondran, President and CEO · 2026-07-28 The cloud on ramps and inferencing hubs that now populate CoreSite campuses are a direct result of this strategy.

CoreSite: The Growth Engine

CoreSite delivered another record quarter of new leasing, with revenue growing 12% year-over-year excluding straight-line revenue. Management noted that 9 of the top 10 AI companies are now customers. The data center business has become the fastest-growing segment, and the company is evaluating ways to expand its development pipeline further. “We believe this year represents a trough for attributable AFFO per share growth, as these headwinds ease heading into 2027.” — Rodney Smith, Executive Vice President, CFO and Treasurer · 2026-07-28 The shift to developed markets and data centers is a core pillar of the capital allocation strategy. The sale of operations in the Philippines and Bangladesh, closing the APAC chapter, is a clear signal of that focus. “We think that we're positioned better than anyone else to provide the basic infrastructure that you need to support Edge in various forms that it may evolve, whether it's AI RAN, whether it's smaller regional data centers that are supporting more inferencing.” — Steven Vondran, President and CEO · 2026-04-28

Financial Headwinds and the Trough Narrative

The company is navigating a complex set of headwinds: DISH churn is a significant drag, refinancing costs are elevated, and the services revenue step-down is another 100 basis point headwind to AFFO growth. Yet management raised guidance again, pointing to underlying strength. Leverage is at 4.9x, within the 3-5x target, and floating rate debt exposure has been aggressively reduced. The company is also buying back shares, with $200 million deployed year-to-date. The fundamentals confirm the operating momentum: FFO for Q1 2026 was $1.1 billion, up 54% year-over-year, and net profit margin expanded to 32% in the most recent quarter. The market is waiting for the payoff, but the evidence suggests this is a company executing a disciplined pivot toward higher-quality, faster-growing assets.