Should You Hold Onto American Tower Stock in Your Portfolio for Now?

American Tower (AMT) reported solid Q1 2025 results, with tenant billings up 5.2% and data center revenue increasing 8.4%, driven by 5G expansion and data center demand. However, legacy Sprint lease churn is expected to pressure U.S. revenue growth to below 4% through Q3 2025. While AMT has $11.7B in liquidity, its $36.86B debt and high interest rates pose funding risks, despite a history of dividend increases and a recent 15.9% stock price increase year-to-date.

Analysis

American Tower Corporation (AMT) reported solid Q1 2025 performance, with total tenant billings up 5.2% year-over-year and data center revenues growing 8.4%, bolstered by global 5G expansion and robust demand for data center capacity. The company's strategic acquisition of a Denver data center facility in April 2025 underscores its commitment to this growth segment. Despite these positive indicators and $11.7 billion in total liquidity, AMT confronts notable challenges, including significant customer concentration, with T-Mobile, AT&T, and Verizon Wireless accounting for 16%, 15%, and 13% of Q1 2025 consolidated operating revenues, respectively. The primary headwind is the ongoing churn from legacy Sprint leases due to the T-Mobile merger, which resulted in a 2% tenant billings churn in Q1 2025 and is projected to suppress U.S. & Canada organic tenant billings growth to below 4% for the subsequent two quarters, before an anticipated recovery to over 5.5% in Q4 2025. Furthermore, AMT carries a substantial debt burden of $36.86 billion as of March 31, 2025, and faces risks from elevated interest rates impacting borrowing costs and expansion capabilities, even with Federal Reserve rate cuts anticipated in late 2024. Nonetheless, the company has demonstrated commitment to shareholder returns, with 15 dividend hikes in the last five years at a 9.07% annualized growth rate, and its stock price has increased 15.9% year-to-date, outperforming its industry, supported by a 1% upward revision in the 2025 FFO per share consensus estimate to $10.51.

Key Decisions for Investors

• Investors should closely monitor American Tower's U.S. organic tenant billings growth in Q2 and Q3 2025 for evidence of the Sprint churn impact bottoming out and signs supporting the guided recovery to over 5.5% growth in Q4 2025.
• Carefully evaluate the company's capital management strategy, particularly its approach to refinancing its $36.86 billion debt and funding future growth initiatives amid persistent high interest rates.
• Weigh the compelling long-term demand drivers from 5G and data center proliferation against near-term pressures from customer concentration and lease churn before adjusting positions, acknowledging the current Zacks Rank #3 (Hold) status.