T-Mobile US Inc. (NASDAQ:TMUS)’s shares are down by 26% over the past year and by 8% year-to-date. As with other carriers, the firm’s narrative depends on its subscriber growth, and more recently, on its ability to compete with SpaceX. The rocket firm, which now also markets itself as an AI firm, also operates the largest satellite internet constellation in the world. SpaceX also aims to offer its cellular service based on its satellites. On August 6th, Cramer discussed T-Mobile US Inc. (NASDAQ:TMUS)’s latest earnings results:
“Some of these are, actually fear of, what’s going to happen. I mean, look, T-Mobile was not perfect, it’s a good example. T-Mobile was not perfect, it was deceleration of what I’m used to. And then it’s a one-two punch, because it’s that and then it’s SpaceX.”
After T-Mobile US Inc. (NASDAQ:TMUS) reported its second quarter earnings in the morning on July 23rd, the shares closed a whopping 11% lower on the same day. The results saw the firm’s profit per share beat analyst estimates. However, a key factor in its narrative, i.e. postpaid subscribers, missed estimates. As part of the earnings, T-Mobile US Inc. (NASDAQ:TMUS) outlined that it expected to add 250,000 postpaid accounts in the third quarter whcih was quite low over analyst estimates of 275,000.
Additionally, during the quarter, T-Mobile US Inc. (NASDAQ:TMUS)’s management also announced that more than 60% of its new additions chose its premium plans. These plans can prove to be more profitable in the future but at the cost of higher customer churn. However, during the call, management also warned that the new plans can increase its churn rate. While T-Mobile US Inc. (NASDAQ:TMUS) outlined that its postpaid churn was 0.85% in the second quarter, the 250,000 subscriber addition guide was based on the costs of the shift to the premium plans.
The focus on the premium and positive metrics, such as a low churn appear to be reflected in T-Mobile US Inc. (NASDAQ:TMUS)’s valuation as well. The firm’s shares trade at a forward P/E ratio of 16.45, which is higher than Verizon’s P/E of 9.38. 85 out of the 1,022 hedge funds part of Insider Monkey’s Q1 2026 database had held T-Mobile US Inc. (NASDAQ:TMUS)’s shares. Furthermore, the short interest appeared to have cleared out a bit after the post-earnings share price movement. As of July-end, it was 3.79% of the float, which was lower than mid-July’s 4.70%.
While Insider Monkey acknowledges the risk and potential of TMUS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than TMUS that has 100x upside potential, check out our report about the cheapest AI stock.
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Disclosure: None.
