Amazon Web Services (AWS) will support AI workloads by connecting its data centers through Verizon fiber optic under an agreement valued at over $2 billion. Google signed a similar fiber optic agreement with this carrier in July, making AWS the second largest AI infrastructure builder on Verizon’s customer list.

Verizon disclosed the dark fiber protocol in its third quarter earnings report on Monday morning, describing it as a commercial framework for expanding distributed computing behind intelligent agents and generative AI. The previous deal with Google was worth over $1 billion and also used dark fiber to connect data centers.

Where does $4 billion come from

Verizon sells this business under the name AI Connect, and CEO Dan Schulman told analysts on the earnings conference call that the business has signed nearly $4 billion in contracts within six months. He stated that other large-scale enterprises, Neocloud providers, and large corporations are in negotiations regarding dark or bright fiber optics. Partners have also begun signing contracts to run edge AI inference in Verizon’s network hub. Verizon’s first long-term contracts are expected to generate hundreds of millions of dollars in revenue during their term.

These have not yet been reflected in the income statement. Schulman stated that Verizon has not yet begun to confirm significant AI Connect revenue and expects the impact to begin in 2027. He described the additional capital as moderate and tied to signed contracts. The company’s 2026 capital expenditure forecast of $16 billion to $16.5 billion already includes these AI Connect investments. Last month, Verizon also secured over 80 million miles of fiber optic supply from Corning by 2032.

Traffic growth is the bet behind pricing. Schulman stated that there may be “at least 100 billion agents” within a few years, and Verizon’s network “will become a scarce and critical asset that we will price based on.

AWS itself is running low on space. Amazon CEO Andy Jassy stated in an interview released on Friday that AWS has essentially sold out its 2027 production capacity and “a significant portion of 2028,” even with planned capital expenditures of approximately $220 billion this year.

Schulman’s Calculation of SpaceX Network

SpaceX has also been mentioned, having previously purchased low-frequency spectrum this month, which may be used for US mobile networks. Schulman stated that ground network construction will require 65000 to 80000 macro sites over a period of at least four to six years, with an estimated cost of $300 billion to $500 billion over the next seven to eight years. He said that if SpaceX really builds, it will become “the sixth competitor in the market, not the fourth or sixth competitor”.

Wireless data is strong. According to CNBC, Verizon added 406000 postpaid phone users this quarter, the best third quarter in five years and nearly twice the Visible Alpha survey analyst’s expectation of 209439. The company has raised its forecast for net increase in postpaid calls for the whole year to 1.1 million to 1.2 million. Due to Verizon’s reduction in device subsidies, customers held their phones for longer periods of time, resulting in revenue of $34.3 billion lower than LSEG’s expected $34.74 billion.

The outlook for 2027, including how AI Connect will drive growth, will be announced during Verizon’s next earnings conference call.