Four communication services stocks to watch: a sector packed with value, growth potential and innovation.

In this article, discover:

• Whether regulatory pressure will hamper the growth of one of the world’s biggest companies
• Will Musk or Altman be tempted to acquire the world’s most used browser?
• How the recovery of an iconic giant could make it a smart growth pick
• Whether a consolidation of power in the advertising industry could represent long-term investor value

Alphabet Inc. - will regulatory scrutiny cause this stock to wobble?

What it does
 
Alphabet is Google’s parent company. Best known for its internet search engine and the Chrome web browser, Alphabet’s other subsidiaries are involved in various fields, including health, transportation, research, and Internet infrastructure. Along with Facebook’s parent company, Meta, Alphabet is one of two companies in the communication services sector with a market cap exceeding $1 trillion^[1].

Why it matters

By any metric, Alphabet is huge, and that might be about to become a problem.

Analysts broadly agree that monopoly lawsuits and demands from the U.S. Department of Justice (DOJ) for Alphabet to cede Google’s search monopoly pose some risk to Alphabet’s continued short-term growth, but they struggle to reach consensus on the scale and imminence of this threat.

The DOJ wants Google to sell its Chrome browser and stop making deals with manufacturers that keep its search engine as the device default. It says Google has used its dominance in search to make it hard for new companies to compete. Alphabet says these proposed changes are too extreme and would hurt users by breaking many of its products. The DOJ's proposals include barring Google from re-entering the browser market for five years and overseeing its Android operations to prevent favouritism. The case was filed during Donald Trump's first term, and it’s not clear if the new administration will press ahead with the case.

What to watch

The vultures are already circling. In August 2025, Perplexity AI, the startup backed by Amazon founder Jeff Bezos, launched a shock $34.5bn takeover bid for Google Chrome. Big numbers, but in the context of Chrome’s three billion users, significantly short of what most analysts think Chrome is worth, even as a standalone product outside of the Google ecosystem.

Some Silicon Valley insiders have dismissed the bid as a stunt, designed to further rock the Alphabet boat. But could it tempt more realistic bids from figures like Elon Musk or OpenAI CEO Sam Altman?

Despite the uncertainty, respected analysts remain bullish on Alphabet, with some even going as far as saying it’s undervalued compared to picks like Netflix. After all, it’s diversified across multiple high-growth sectors, innovative, and has a track record of rapid evolution and expansion into new areas.

Disney - are legacy brands good value investments?

What it does

Founded more than 100 years ago as a cartoon studio, Disney’s theme parks, feature films, intellectual property rights, and forays into new media formats have positioned it as a household name with immense brand affinity. It’s an iconic powerhouse across media, entertainment, travel, resorts, and experiences, and remains one of the world’s most recognisable brands.

Why it matters

Disney is an economic bellwether. The resorts and parks, in particular, are strong indicators of the general health of the consumer economy. Yes, Disney is a communications services stock, but its stable of services relies heavily on strong consumer fundamentals.

In recent years, Disney’s performance has been indicative of a sluggish economy still battling to escape COVID-19 era consumer pessimism. Analysts have been looking to Disney more recently for signs of recovery.

Has Disney given them cause for optimism?

What to watch
 
In August 2025, Disney announced in its fiscal Q3 report that it had fallen short of revenue targets. Despite the unwelcome headline, there was also encouraging news.
 
Disney's direct-to-consumer business reported operating income of $346 million^[2]. Compared to a loss of $19 million in the corresponding period one year ago, that’s an impressive turnaround^[2].
 
Revenues increased 2% compared with the 2024 fiscal third quarter, pre-tax income increased 4% for the same period, and operating income increased 8%. By any metric, these were not terrible results. Yet Disney’s price dropped 4% while revenue had climbed 6%^[3].
 
General pessimism about the media sector, combined with underwhelming headline figures, might be partially to blame. But Disney’s stronghold in growing sectors like streaming, with plans to consolidate Hulu into Disney+, plus improving performance in parks and resorts, tells a different story.
 
So, is this a dip, and should savvy investors be buying?
 
Disney has broadly underperformed the wider market since 2020^[4]. Part of that is due to COVID-19 era travel restrictions hitting its parks and resorts. Park visits and experiences are picking up, and customers are spending more when they’re on-site.
 
A lot of analysts see Disney as having been underpriced for the past few years, so this recent drop could be the nudge hesitant investors need to take a position on one of the world’s most famous communications services stocks. With Disney’s diversity across paid media channels, plus its foothold in travel, a lot depends on consumer confidence. When the economy struggles, companies like Disney suffer too.
 
But if you’re bullish on the economy and think Disney has been undervalued, could now be the right time to take a position?

Omnicom and Interpublic - could a merger lead to long term growth that outperforms the market?

What they do

These are two of the world’s largest advertising agencies. Both are multinationals, built over the past few decades from a series of mergers which has seen a major consolidation of power at the elite tier of the sector, similar in many ways to the consulting sector.

Fans of the TV show Mad Men will recognise some of the constituent agencies that form these two conglomerates, like BBDO, McCann, and FCB.

Advertising as an industry is undergoing a period of disruption and uncertainty as the world’s biggest advertisers, who traditionally outsource creation and placement to powerful agencies, experiment more with AI-powered insourcing.

Why it matters

Omnicom and Interpublic are respectively the third and fifth largest^[5] advertising agencies in the world by market capitalisation. Combined, they represent almost a third of the market cap of the ‘big six’ advertising agencies^[5].  And with a proposed merger between the two giants expected to go ahead after clearing some major regulatory hurdles earlier this year^[6] , Omnicom will become the largest advertising agency in the world by revenue once Interpublic is incorporated.
 
What to watch
 
Naturally, the markets have been pricing in the merger since the plans were announced. Back in December 2024, Interpublic stock jumped in price by 10% off the back of merger speculation^[7].
 
Savvy traders will be asking two questions. Will the combined entity represent value for money in the long term? Omnicom management is making the case for potentially enormous cost savings. And will price action increase the closer we get to the merger?
 
The bottom line
Cautious investors will be most attracted to steadily growing stocks like Alphabet, plus defensive picks like Verizon, both of which display resilience and a low likelihood of reduced demand for core services. Ambitious investors and traders might look more toward the value end of the market, with the likes of Omnicom, Interpublic, and Charter Communications showing obvious appeal.