The best 5G stocks will evolve over time.IPhone maker Apple ( AAPL ) always merits consideration.But the supply chain of Apple stock is a more seasonal and cyclical opportunity.
X Most technology stocks have retreated in 2022.But the Nasdaq composite popped 6.8% the week before the Memorial Day weekend, snapping a seven-week losing streak.
Semiconductor stocks offered an early play on 5G wireless, and remain an opportunity.Investors rightfully have been cautious on 5G network gear makers and other infrastructure plays, like cell-phone tower operators.
In the long run, 5G wireless services delivered to businesses via cloud computing giants like Amazon.com ( AMZN ) could offer the best 5G stocks.Many startups are active in “edge computing.”
Investors should look for updates on company earnings calls as more smartphones, laptops, autos and internet-connected industrial devices use 5G technology.Chip maker Qualcomm ( QCOM ) reported fiscal second-quarter earnings that crushed Wall Street targets.
Dish Networks ( DISH ) turned on its first 5G market , Las Vegas, on May 4.Dish, primarily a pay-TV service provider, played up its 5G strategy at an investor day on May 10.
Research firm Omdia forecasts that by 2026, 40% of all mobile subscriptions will be 5G, totaling 4.8 billion.
In addition, annual 5G mobile service revenues are expected to reach $540 billion worldwide by 2026, representing 60% of revenues.
Best 5G Stocks: Capital Spending To Jump In 2022 Naysayers still question the return on 5G investment for telecom companies.They point to the lack of a 5G “killer app” for consumers.
“We do not expect material revenue increases in the global telecom sector from 5G in the 2022 to 2025 period,” credit rating agency Moody’s said in a recent report.”While the revenue picture remains uncertain, 5G still requires significant investment.”
“So far, a true 5G killer app has yet to emerge, which reduces the potential for revenue growth,” added Moody’s.”Indeed, it has become apparent that the most compelling use cases for 5G revolve around businesses rather than residential consumers.”
Analysts expect 2022 to be a big year for capital spending by U.S.
wireless service providers.Some 5G stocks should get a lift as they ramp up spending on 5G communications network infrastructure.
Led by T-Mobile US ( TMUS ), U.S.wireless firms are deploying 5G wireless services using high-performance, midband radio spectrum.Verizon Communications ( VZ ) and AT&T ( T ) are playing catch-up and will spend the most in 2022 and 2023.
“The U.S.
is seeing an unprecedented level of activity as all carriers are ramping up 5G deployments,” UBS analyst Batya Levi said in a note.”We expect U.S.
wireless capex to grow 18% in 2022 to a record $41 billion, following over 10% growth in 2021.While capex will start to step down in 2023/24, we believe gross tower activity will remain elevated for several years, similar to the 4G cycle.”
5G Wireless Stocks: Augmented Reality Apps Coming? Apple on March 8 introduced a refreshed, 5G-ready model of the iPhone SE with the A15 bionic processor.
The new 5G iPhone SE model starts at $429.
5G networks provide faster data speeds to consumer devices.The emergence of new consumer smartphone apps would boost 5G stocks.
Long-range, augmented reality apps could be a a driver for 5G stocks.
“We expect Apple to introduce an augmented reality/virtual reality headset, either by the end of 2022 or early 2023,” Bank of America analyst Wamsi Mohan said in a note.”We view this technology as a game-changer as it will enable many new applications which will require high performance hardware and higher access speeds.”
He added: “We now expect a stronger iPhone upgrade cycle in fiscal 2023 driven by the need for higher connectivity where augmented reality becomes the killer app for 5G.”
AR and virtual reality are also expected to be part of the metaverse — virtual worlds enabled by digital technologies .Facebook-parent Meta Platforms ( FB ) aims to be a metaverse leader.
The metaverse, whether years or decades off, will give wireless network operators the chance to monetize 5G and 6G investments.
In addition, the metaverse could open up new opportunities for investors in 5G stocks and, down the road, 6G stocks.Chipmaker Nvidia ( NVDA ) calls its development platform the omniverse.
Meanwhile, 6G wireless networks are expected to enable new holographic services, drive augmented reality applications and support the concept of digital twins.
Best 5G Stocks: Cloud Computing Looms Cloud computing infrastructure is expected to play a big role in deploying 5G services.
“The advent of 5G should mean the rollout of many new technologies we certainly haven’t yet imagined,” economist Ed Yardeni said in a recent report.”To make them possible, the tech gurus are saying that cloud computing will move from a cloud server far away to equipment on the edge of a neighborhood’s network.Edge computing should continue to increase the speed of data transmission, but carriers will have to open their wallets to make it happen.”
Microsoft ( MSFT ) is selling global network transport and routing services to 5G network operators.
Microsoft calls the initiative “Azure for Operators.” Microsoft purchased AT&T’s network cloud business.
Amazon Web Services and Alphabet ‘s ( GOOGL ) Google are also selling 5G-related cloud infrastructure services.AWS in December announced plans to sell private 5G network services to enterprise customers.
The AWS “5G in a box” service initially will use shared “CBRS” spectrum.
In the long run, Amazon could partner with Dish for a 5G network, analysts speculate.
Verizon has partnered with AWS, Google and Microsoft to develop 5G cloud services.
A wide range of tech companies are building 5G ecosystems for private networks that deliver business-to-business services.Telecom industry group 5G Americas forecasts that the addressable market to incorporate 5G into private business networks will jump sharply over the next five years, to $16.9 billion in 2025 from $1.9 billion in 2020.
In many industrial settings, 5G infrastructure is expected to displace Wi-Fi-based services.
Best 5G Stocks: Multi-Year Boom For Chipmakers Smartphone chip maker Qorvo ( QRVO ) on its fourth-quarter earnings call noted that 5G growth in China has reset lower, but some of that has been offset by better rest-of-world demand.Barclays expects India to be the fastest growing market for 5G smartphones from 2022 through 2024.
Barclays estimates that worldwide 5G smartphone shipments jumped 120% in 2021 to 561 million units.In 2022, Barclays expects 5G smartphone shipments to rise 30% to 728 million units.It projects 24% growth in 2023 to 904 million 5G smartphones.
Smartphones currently drive most demand for 5G chips from Qualcomm, Marvell Technologies ( MRVL ) and others.
Some analysts view Qualcomm as a top pick in 2022 .
Apple, Samsung and Chinese Android-based smartphone makers are big customers of 5G-chip makers.Those chipmakers also include Skyworks Solutions ( SWKS ) and Qorvo.
One issue for Qualcomm is that Apple and Samsung are building more homegrown 5G devices.”Internal solutions from Samsung could become more prevalent; we could start to see Apple experiment with its own 5G in areas such as iPads,” Morgan Stanley analyst Joseph Moore said in a recent note.
Aside from Qualcomm and Skyworks, Cirrus Logic ( CRUS ) and Analog Devices ( ADI ) also make chips built into smartphones.In China, Qualcomm faces more competition from local chipmaker MediaTek.
Some chipmakers sell into the 5G network market.They include Marvell, Broadcom ( AVGO ), Intel ( INTC ), Texas Instruments ( TXN ) and Analog Devices.
Meanwhile, Xilinx ( XLNX ) makes programmable chips built into prototype network gear.
5G Stocks: Look Beyond Smartphone Supply Chains South Korea and China currently lead in 5G network coverage while Europe lags.
But China’s big three telecom companies have slowed investments in 5G networks in 2021.
T-Mobile has jumped ahead of Verizon and AT&T in deploying a 5G mobile network using high-performance, midband spectrum.
In addition, T-Mobile’s midband 5G network reached 210 million people at the end of 2021.It’s expected to reach 300 million by 2023.
T-Mobile also plans to launch 5G fixed broadband services to residential customers.
It’s targeting 7 million to 8 million customers by 2025.
Verizon’s 5G network uses both lower-band and high-frequency “mmWave” airwaves for 5G fixed broadband.
Sweden’s network gear maker Ericsson ( ERIC ), Finland-based Nokia ( NOK ) and South Korea’s Samsung are the biggest suppliers of 5G network gear outside of China.
“Nokia and Ericsson both believe mmWave will not be as impactful as carriers were once advertising it to be just a few years ago,” Susquehanna analyst Mehdi Hosseini said in a report.”Mid-band/C-band will be the focus through 2023-2024 as mmWave will only have particular use cases in the near future.As we have been hearing from most companies in the networking food chain, enterprise use cases such as private 5G are going to be a significant vector for growth.”
5G Stocks: Enterprise Apps Could Be Revenue Driver A wide range of tech companies are building 5G ecosystems for private networks that deliver business-to-business services.Telecom industry group 5G Americas forecasts that the addressable market to incorporate 5G into private business networks will jump sharply over the next five years, to $16.9 billion in 2025 from $1.9 billion in 2020.
In many industrial settings, 5G infrastructure is expected to displace Wi-Fi-based services.
Pundits expect 5G wireless to have a role in manufacturing automation, cloud gaming, autonomous vehicles, drones and remote health care services.
“Enterprise solutions could be the largest 5G revenue drivers, including factory and manufacturing, with telemedicine and health monitoring also new drivers,” Raymond James analyst Ric Prentiss said in a note.
In time, the breadth of 5G stocks will expand.The future of 5G wireless lies in the industrial Internet of Things (IoT), remote health care, drones and robotics, autonomous driving, smart cities and more.
Cybersecurity firm Palo Alto Networks ( PANW ) last year unveiled new security tools to secure 5G infrastructure and web-connected industrial devices.Palo Alto’s product offerings enable end-to-end protection of 5G networks.
For some 5G stocks, the long-term opportunity will be tied to new networks that blur the line between mobile and fixed-line infrastructure.
5G Wireless: Higher Frequency Airwaves Require More Equipment Initially, 5G networks will utilize higher frequency airwaves in urban areas.
As a result, they require more equipment, more cell towers and more fiber-optic wiring than previous generations.
Makers of fiber-optic technologies also are part of the 5G wireless network supply chain.5G networks will require “small cell” radio antennas, radio access network equipment as well as links to cloud computing infrastructure.
The global 5G radio access market will jump to $21 billion in 2024, up from less than $4 billion in 2019, research firm Omdia forecasts.
Further, 5G also is a long-term opportunity for network gear makers Ericsson, Nokia and Samsung.
Cellphone tower operators American Tower ( AMT ), Crown Castle ( CCI ) and SBA Communications ( SBAC ) also could get a 5G boost, analysts say.Crown Castle will be a 5G infrastructure partner of Dish Network.
5G Networks Require Fiber-Optic Technology 5G networks will connect to fiber-optic networks for “long haul” purposes.That will provide reliability for emerging automotive, robotics and medical applications.
Potential 5G stocks to buy include Corning ( GLW ), Ciena ( CIEN ) and other fiber-optic players.
Only 19% of U.S.business professionals claim to understand the benefits of 5G, according to a Ciena survey done with research firm Dynata.
“5G is much more than just a faster wireless technology,” Steve Alexander, Ciena’s chief technology officer, said in a news release.”5G enables constant connectivity for people, machines and devices and is the infrastructure that the Internet of Things will rely on to create the cloud experience that we all need in our increasingly digital world.”
Crown Castle makes “small-cell” radio antennas for 5G services in urban areas.The small-cell antennas — hung on utility poles or building rooftops — will require fiber-optic connections to local hubs.
Local government approval, though, is required to expand 5G networks.
Rysavy Research projects that there will be 1 million U.S.outdoor small cells by 2028, up 10 times from today’s levels.
Keysight Technologies ( KEYS ) makes 5G network test gear .Keysight competes with Viavi Solutions ( VIAV ) and others in the 5G test gear market.
5G Wireless Targets Broadband To Homes Some telecom firms aim to provide fixed 5G broadband to homes.That poses a long-term threat to cable TV companies such as Comcast ( CMCSA ) that dominate in broadband services.
Verizon has stated that it expects meaningful revenue from 5G wireless broadband services to homes by 2022.T-Mobile also plans to roll out 5G broadband services to homes.
Rysavy Research forecasts that within five years 5G broadband will emerge as a legitimate rival to cable’s high-speed internet services.
5G networks also will improve latency, the lag time it takes networks to respond.That’s crucial for applications such as autonomous driving, remote telemedicine and factory automation.5G networks reduce latency to a few milliseconds from lags of 50 to several hundred milliseconds.
Edge computing deploys data processing, storage and networking close to sensors and where other data originate, near the “edge” of the network.The goal is to process and analyze data locally in real time rather than send it to faraway data centers in the internet cloud.
How 5G Wireless Will Change Cloud Computing That should be a big opportunity for chipmakers Nvidia and Intel, some analysts say.
Nvidia and Intel are the biggest providers of data center processors for cloud applications.
Mini data centers in neighborhoods will link to cloud-computing infrastructure.Nokia and Ericsson are developing 5G cloud gateways.
Verizon has teamed with Amazon to develop 5G edge computing services.More recently, it partnered with IBM, Microsoft and Google.
Spending to enable edge computing — also called “multi-access edge computing,” or MEC — is forecast to increase from $2.7 billion in 2020 to $8.3 billion in 2025, according to Juniper Research.
With cloud software technology, pundits expect wireless firms to provide connections for drones and smart manufacturing.Dell Technologies ( DELL ), Hewlett Packard Enterprise ( HPE ), Nokia and others aim to capitalize on edge computing.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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