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The Hottest 5G Stocks You Should Watch

Charlie Brooks

Apr 07, 2022 17:16

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In the wake of the epidemic, various technological developments have accelerated: work-from-home, automation, internet streaming, etc. 5G equities are beginning to rebound from the coronavirus and the US presidential election uncertainties. 


The epidemic has spurred work-from-home, automation, internet streaming, and other developments. A year ago, 5G equities were volatile. Globally, mobile network providers picked 2020 to launch 5G services. 


5G promises multi-gigabit peak data rates, ultra-low latency, and huge network capacity. 5G wireless technology is one of the hottest investment ideas due to global demand and quick deployment.

What's 5G?

5G is an abbreviation for fifth-generation wireless technology. It is the fourth generation of mobile technology, after 1G, 2G, 3G, and the most current 4G. It will be speedier and accommodate a greater number of wireless devices than earlier generations of technology. Therefore, why should you be concerned?


Because it guarantees faster peak data transfer rates, increased connectivity and reliability, and increased performance...


Increased speeds and connectivity will pave the door for new technological advancements. This entails expansion, competition, and the establishment of other companies.


There are still several unknowns about the date of the widespread availability of 5G. However, there may be more excitement in the expectation of technology than when it comes... That is critical for traders to comprehend.


Remember when marijuana stocks were the market's hottest sector? They embarked on a wild ride in 2017 in anticipation of Canada's statewide legalization of recreational marijuana. Then, on the day of legalization, the stocks tanked and plummeted.


It's a case of 'buy the rumor, sell the news.' By the time a news release, new technology, or new product is released, the excitement has already been included in the stock's price. Then, with little space to go, the stock falls.


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It's natural for people to get enthusiastic about new technology that has the potential to enhance our everyday lives. And we've seen significant changes in how people live and work this year due to the coronavirus outbreak.


Many individuals have opted to work from home or on the move rather than being confined to a desk from 9 to 5.


As a result, it is more critical than ever to connect from any location at a fast speed.

Why should we invest in 5G?

5G, or 5th Generation Connectivity Standard, is a new level of connectivity that is projected to provide quicker data transmission, reduced latency, and enhanced capabilities for connecting more devices in a single system.


Although you may believe that 5G only implies speedier games and more powerful devices, its influence on every part of our life might be transformational. The ultra-fast data transfer and low latency of 5G enable a vast growth of the Internet of Things (IoT) devices, powerful edge computing, and sophisticated artificial intelligence (AI) applications such as machine learning (ML) and deep learning (DL).


When combined, these advancements allow futuristic-sounding technologies such as:


  • Robotic process automation (RPA) for manufacturing in the dark;

  • Intelligent factories capable of detecting, diagnosing, and even resolving difficulties;

  • Intelligent cities, with traffic lights and street lighting that react to the number of traffic;

  • 24/7 medical monitoring using wearable and implanted devices;

  • Rapid remote collaboration for home-based teams;

  • Autonomous self-driving automobiles;

  • Forecasting weather, illness, and pests using machine learning to boost agricultural and animal yields

  • Drone missiles, military vehicles, and surveillance equipment are all unmanned.


Indeed, it's difficult to imagine a vertical that would be unaffected by 5G. According to PWC, it may provide a total economic boost of at least $1.3 trillion in the United States alone1, while Qualcomm estimates that it could generate $13.1 trillion in worldwide economic output2. JP Morgan expects a 16% cost reduction in healthcare due to remote patient monitoring3, while McKinsey thinks that 5G-enabled agriculture may contribute $500 billion to global GDP by 2030.

Consider the Following Before Investing in 5G Stocks

5G stocks are unquestionably the hottest buys since 5G will be the decade's most transformative technology. 5G stocks have the potential to offer very high rates of return on investment. However, who cannot overlook the hazards involved?


Investors must assess the telecom and technology companies moving towards 5 G's overall stability and reliability. While there is a high possibility of success, the economic uncertainty caused by trade tensions between the US and China, reduced demand for data centers, and the economic downturn may spell difficulty for 5G stocks.


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Additionally, investors with a greater risk tolerance may choose to explore investing in tiny yet revolutionary companies operating in related subsectors, such as producers of RF filters.

List of The Hottest 5G Stocks

Nvidia (NVDA)

The first stock on my list of 5G stocks is Nvidia, which is scheduled to release its latest quarterly results on Nov. 18. Needless to say, experts have high hopes. According to Wall Street analysts, the California-based corporation would "make $2.56 per share on $4.41 billion in revenue." Nvidia earned $1.78 per share on $3.01 billion in revenue a year ago.


The company's high sales of graphics processors for gaming systems and data centers have contributed significantly to this expansion. Additionally, Nvidia is nearing the completion of its purchase of chip creator Arm from SoftBank (OTCMKTS: SFTBY). The $40 billion purchase, announced on Sept. 13, would enable Nvidia to expand its presence in data centers with servers powered by central processing units (CPUs). This would put Intel (NASDAQ: INTC) and Advanced Micro Devices (NASDAQ: AMD) in direct competition with one another in the server CPU market.


NVDA stock could benefit from 5G since its graphics cards are used in data centers, PCs, and 5G networks. Additionally, the corporation has worked with Ericsson to boost the efficiency and intelligence of 5G networks in the United States and elsewhere. The collaboration seeks to bridge gaps in network infrastructures where carriers are unable to use available capacity.


Thus, when 5G becomes a norm in the next few years, Nvidia is well-positioned to benefit. Additionally, NVDA stock has already had a fantastic year, rising 179 percent from its March low. While the share price has dipped somewhat too roughly $540 in recent weeks, analysts remain exceedingly confident. The stock's consensus price target is $600, with a high estimate of $700.

T-Mobile US (NASDAQ:TMUS)

T-Mobile US (NASDAQ: TMUS) finalized its merger with Sprint in April 2020, becoming what the company dubbed a "supercharged Un-carrier" capable of delivering a transformational 5G network. And, marketing jargon aside, this was not incorrect.


The business said at the merger announcement that it intends to have 14 times the total capacity of T-Mobile in the next six years, with T-Mobile also promising that all new members will have free access to 5G.


T-Mobile has continuously performed well over the previous five years, resulting in a stock price increase from $40 to $115. And even after the T-Mobile merger with Sprint was finalized, T-Mobile owed $72.5 billion, which, although large, is far less than AT&T's and Verizon's debts of $169 billion and $113 billion, respectively.


Week over week, T-Mobile rebounded from a market-wide sell-off that afflicted the majority of 5G stocks during the US election season, and T-Mobile shares regained 12 cents, putting them near their 12-month high.


T-Mobile most recently addressed what it dubbed the competition's "carrier death grip" by unveiling three new products – the 'Home Office,' 'Collaborate,' and 'Enterprise Unlimited' plans – all of which would be included in a new offering called 'WFX' (work from anywhere).

Ericsson (STO: ERIC-B)

Ericsson's (STO: ERIC-B) stock increased nearly 10% after the firm disclosed adjusted revenues of SEK69.6 billion (£6 billion) for the past financial year, a 13% year-on-year rise driven by 5G and sales in Northeast Asia, Europe, and North America. Operating income, excluding restructuring charges, climbed by 80% to SEK11 billion, while reported net income was SEK7.2 billion.


Ericsson highlighted strategic contracts, particularly in China, as a source of confidence, and it will undoubtedly want to build on crucial relationships, such as securing an 11.5 percent interest in a $52 billion China Mobile bidding (the only European company to do so).


Elsewhere, the company's intellectual licensing business has continued to perform well as a consequence of its exceptional IPR portfolio, the majority of which has been focused on the 5G market with "proved performance and cost of ownership advantages."


"By utilizing our competitive product range, we have continued to grow our market share in numerous areas," Ericsson's Q2 report said. "Profitability on previously awarded strategic contracts has increased in line with expectations. We see strategic contracts as a natural part of our business and will refrain from making forward-looking statements until there is a material effect."


To cap off a successful year for the firm, it just announced that it would collaborate with Oman to assist in providing 5G as part of a multi-year relationship. As a consequence, the company's share price increased 24 hours later from 87.64 SEK to 96.86 SEK. And, since mid-October, we've witnessed a modest but steady rise in price, with the stock presently trading at SEK 100.06 after better-than-expected financial results.

Qualcomm (NASDAQ:QCOM) 

Qualcomm (NASDAQ: QCOM) is one of the most notable 5G stocks, and after a market-wide decline in the aftermath of the coronavirus outbreak, Qualcomm's share price has rebounded spectacularly well, recently reaching a 2020 high of $158.09 in December. It has since declined somewhat, falling to $151.79 at the start of January, and after a brief rebound, it fell further to $127.87 on Mar. 11, before rising marginally over the following four months to reach $138.24.


Qualcomm should have had a wonderful February, having gained 83% in 52 weeks, but its stock fell, with a further decrease at the start of March. For those wondering why this occurred, it seems as if Qualcomm's robust 2020 forecast was not strong enough for certain investors. Thus, rather than Qualcomm being a busted flush, now may be an excellent moment to purchase.


And, given Qualcomm's history, the company should be able to rebound. According to Yahoo! Finance, "one of Qualcomm Inc's standout quality indicators is its five-year Return on Capital Employed, which is a respectable 13.0 percent." ROCEs in the double digits indicate companies with the potential to develop extremely profitably.”


Qualcomm's stock has also increased in value following the recent announcement of the company's new Robotics RB5 platform, which integrates critical capabilities such as high-performance heterogeneous computing, 5G/LTE, high-fidelity sensor processing for perception, odometry for localization, mapping, and navigation, strong security, and Wi-Fi connectivity.


The revelation resulted in a six-dollar increase in Qualcomm's share price, reflecting the growing momentum around 5G use cases in industrial sectors. (The Qualcomm Robotics RB5 platform is intended for the next generation of high-performance, low-power robots and drones for use in consumer, business, military, industrial, and professional service applications.)

Ciena (CIEN)

Ciena (CIEN) was one of the dot-com era's hottest networking operators. In 2000, the shares would be worth more than $800.


Regrettably, this would not endure. Following the bubble breaking, the CIEN stock continued to languish for many years.


Yet fortunes may be beginning to shift — and this may be more than a passing phase. The primary reason is that 5G will need significant investment in network infrastructure to accommodate the massive amounts of bandwidth. Ciena, for example, was the first to market with an 800-gigabit system, which has gained significant popularity. Additionally, the company's experience in fiber optics and software-defined networking is advantageous.


However, there is another possible stimulus for the company: the increasing use of penalties against Huawei, a Chinese technology powerhouse. This should result in increased commercial prospects around the globe.


While sales growth has been slow, the corporation has maintained healthy profits. In other words, as Ciena expands its business via 5G, the company's bottom line should benefit.

Marvell Technology Group (NASDAQ: MRVL)

Marvell Technology Group (NASDAQ: MRVL) suffered a downgrade at the start of the year, but investors did not panic, as the stock rallied from $21 at the end of February to over $45 at the start of December. And it surged even higher at the start of January, eventually stabilizing at $50.98 on Feb. 22 before progressively climbing to $62.46 on Sept. 16.


As with Qualcomm, the reason for this is likely to be lower-than-expected results, despite the fact that Marvell stock has increased by 80 percent in the last year (in contrast, the PHLX Semiconductor index has increased by just 58 percent).


Marvell, which generated over $3 billion in sales in 2019, has partnered with companies such as Nokia to deliver a new line of system-on-a-chip and infrastructure processors. Marvell's chipsets will ultimately replace Nokia's first choice of field-programmable gate arrays (FPGAs) for its 5G offerings. These were high-priced choices that did not seem to pay off.


The fact that Marvell stock has expanded so rapidly in recent years may have driven it out of the reach of many investors, with some suggesting that it is now overvalued, but it may still be a decent purchase for those seeking a longer-term investment.

Digital Realty Trust, Inc. (DLR)

Digital Realty Trust, Inc. (DLR) is a leading developer and purchaser of data centers with telecom customers that are essential in constructing the physical infrastructure required for 5G. Clients access the cloud via its data centers for storage, processing, and client interface requirements. DLR is a pioneer in the industry.


Tom Hutchinson of Cabot Dividend Investor is a fan of DLR, stating,


"Aside from the long-term benefit of being in a growing company (data center assets), there are a few reasons to prefer DLR in the immediate term. One is that after a prolonged period of sideways movement, the stock broke out to a new near-term high, which is a bullish technical development. The second reason is that it is an excellent stock to hold during times of market turmoil. It has a microscopic beta of 0.30, indicating that it moves independently of the broader market. It's beneficial to have a stock like that in one's portfolio, even more so when things go a bit problematic."


For the previous 16 years, the firm has grown its dividend—a pleasant bonus to complement future development.

Alibaba (BABA)

Alibaba is the last stock on my list of 5G stocks since it is a Chinese technology that is involved in a wide variety of technologies. As a result, it's unsurprising that the corporation is also a market leader in 5G networks and applications. Alibaba has even built a research facility to advance 5G technology development.


The 5G center, formerly known as the Alibaba XG Lab, conducts research on 5G applications for e-commerce, entertainment, and virtual reality. These efforts have been bolstered by the Chinese government, which is pushing for the country's "rapid deployment of 5G-base stations." In other words, Alibaba is assisting China in establishing a leadership position in cutting-edge technology.


Apart from its research center, Alibaba has invested in China Broadcasting Network — a cable TV provider and newcomer to China's telecom market — to develop its 5G spectrum. Clearly, 5G is a significant priority for Alibaba.


Naturally, this should all contribute to the future strength of BABA stock. The stock is currently trading at more than $257, up 51% from its March low. And although the price may be volatile and fluctuate (BABA recently reached $319 a share), analysts predict shares to settle and expand as President-elect Joe Biden's US-China ties chill.


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As a result, Alibaba's growth is projected to accelerate in the near future. Analysts expect the stock will reach a consensus price objective of $2,324 in the next 12 months, implying a potential increase of more than 800 percent.

Final Thoughts

In this 5G investors guide, we'll focus on the hottest 5G companies to invest in and strategies for those interested in investing in 5G stocks. After reading our complimentary report, you'll understand why we're so excited about 5 G's enormous potential, not only for investors but for the whole world.

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