Telco AI: State of the Market, Q2 2026

Many AI announcements in Q1 2026 focused on telecoms operators and partners building out sovereign capabilities to satisfy national requirements around data residency, compute and LLMs. Meanwhile, investment in agentic AI build-outs has extended beyond networks and software to machines, drones, cars and other industrial assets – so-called ‘physical AI’. As well as recent developments from the telco AI space and the Telco AI tracker, this edition provides a deep dive on the implications of the growth of on-device AI.

The key change over the last six months has been telecoms operators using AI in their product portfolios to enhance commercial efforts, particularly with enterprise segments. In the US alone, 50% of the new AI deployments since June 2025 have had a revenue objective. As well as recent developments from the telco AI space and the Telco AI tracker, this edition also provides a deep dive on AI's contribution to operator energy consumption.

While AI rollouts focused on saving money still account for the bulk of deployments, there is a growing movement towards using AI with a revenue objective.