The 5G revolution is coming, and that means it’s time to search for the right 5G stocks to invest to reap the revolution.
Let’s take a look back first. What’s 5G, exactly?
5G is essentially the 5th generation (hence 5G) of the mobile network. It naturally follows 1G, 2G, 3G , and 4G, and represents a new global standard for wireless Internet connectivity.
And what is 5G going to do?
It would usher in a new age of unparalleled connectivity on the Internet. Similar to 4G, 5G is far cheaper, with much greater network bandwidth, much less delay, much more flexibility, and improved spectrum infrastructure. It could feel like a lot. If so, just consider this: 5G is a modern cellular infrastructure that can make any device connected to the internet quicker, allow more devices to be connected to the internet at the same time, and allow more devices to do more sophisticated things.
And why is 5G such a big deal?
As a country, we’ve essentially “maxed out” 4G infrastructure. We are at full capacity when it comes to how quickly our phones can go, how many computers we can connect to the internet, and how many things these devices can do. As such, things like stand-alone driving, the Internet-of-Things, and modern cloud computing can not achieve their maximum capacity until 5G is available.
As a result, the rapid introduction of 5G technologies in the next two years would have significant economic consequences. The coming 5G transition is expected to amount to $13.2 trillion in global economic production by 2035. That’s basically the full scope of China’s economic production.
Now that you realize that the 5G transition will lead to some big investing gains in the next few years, let’s take a closer look at the best 5G stocks to buy right now:
Maybe the most apparent 5G stock to buy is Verizon, because it is the U.S. telecommunications company that would eventually introduce 5G services to end-market and end-devices.
Why pick Verizon over AT&T (NYSE:T) or T-Mobile (NASDAQ:TMUS)? A couple of reasons.
First, Verizon has long been the undisputed leader in this market, providing the best standard 3G and 4G broadband coverage. It is focused on the fact that the company is ideally placed to expand its leadership with the highest-in-market coverage in 5G.
Second, T-Mobile became hampered by the acquisition of Sprint. While this deal has long-term advantages, it also has near-term problems that that preclude the organization from completely capitalizing on the 5G potential.
Third, AT&T is burdened with a lot of debt. All of this debt could lead to organizational and expenditure problems over the next few quarters.
Verizon is the perfect way to play out the 5G boom among U.S. telecommunications companies.
Technologies of MACOM (MTSI)
MACOM Technology is a small-cap 5G stock to purchase for potentially spectacular returns. Investors can look at MACOM as an “infrastructure play” on the 5G boom.
In order for 5G to work effectively, the wireless network infrastructure needs to be changed to support 5G technology. This includes rejigging base stations with something called “Massive MIMO” or a massive multi-in, multi-out architecture. The science here is fairly complex. In short, Massive MIMO involves putting a bunch of extra, 5G-enabled RF antennas on each base station. Thus, enabling better wireless performance without maxing individual antenna power (faster speeds with more network density).
Who makes the brand-new 5G RF technology that allows these base station network upgrades? MACOM Technologies.
The small, $1.9 billion developer of RF, microwave, and millimeter-wave semiconductor devices and components is expected to increase demand for its 5G product portfolio over the next few years. When this happens, the sales, earnings, and stock values of MACOM will all boom higher.
Back in the big-cap world, another way to play 5G stocks is by purchasing Apple.
Apple is the world’s largest and most important smartphone, smartwatch, and tablet manufacturer. Coverage of 5G would result in breakthrough mobile app enhancements.
Yet, since 5G is a new technology, it’s not compatible with old smart devices. This only operates entirely with new, 5G-enabled smart devices. As a result, the 5G revolution will trigger a massive hardware smart device upgrade cycle of 5G-enabled phones, smartwatches, and laptops.
From this angle, Apple is expected to sell a large number of 5G-enabled iPhones, Apple Watches, and iPads in the next few years, beginning with the big 5G iPhone launch at the end of 2020.
In the middle of this surge in hardware revenue, Apple’s tech business will also flourish. As connected device digital services (such as mobile video games or streaming platforms) will quickly boost accessibility, resulting in users investing more money on those platforms.
Big picture: Apple’s hardware and software businesses will all expand dramatically in the next few years. In the midst of this large growth, AAPL’s stock is going to rise higher.
Next to MACOM, Boingo is another small-cap stock of 5G stocks to be purchased for potentially explosive returns in the early 2020s.
Investors should look at Boingo as a company that could help 5G solve its biggest problem; that it doesn’t work well indoors.
America’s largest wireless service providers – Verizon and AT&T – have built up their 5G networks using a millimeter wave spectrum. Testing has shown that millimeter waves allow rapid over-the-air transmission. But, with all their size, millimeter waves have very low propagation methods, i.e. 5G millimeter waves can not penetrate houses.
This is a big deal. Americans spend 90% of their day indoors. Where 5G coverage is needed to work the most, in offices and homes, it doesn’t work all that well.
As one of the world’s largest providers of indoor wireless networks, Boingo is an expert in using things like distributed antenna systems to optimize indoor wireless reception. For the next two years, the organization will use this experience to help cellular service providers tackle the 5G indoor problem.
In fact, this is already happening. In August 2019, Verizon revealed an alliance with Boingo to develop hyper-dense 5G networks. That would exploit Boingo’s dispersed antenna systems to amplify Verizon’s 5G millimeter waves in Boingo venues.
More of these partnerships will take place over the next few quarters. If they do, they will pave the foundations for exponential sales and earnings increases in the next few years. The likes of which would drive WIFI’s stock significantly higher.
Because chip giant Qualcomm is at the epicenter of smartphones, QCOM’s stock is one of the best 5G stocks to buy right now.
The company makes chips that power smart devices. They’re the best people in the world to do that. Just ask Apple, who tried hard to fight Qualcomm’s smartphone chip business. Ultimately Apple stopped because they realized they couldn’t do a 5G iPhone without it.
Extrapolate that out.
Over the next few years, every company out there will be launching new 5G smartphones and devices. All of these upcoming 5G smartphones and computers will need new 5G chips to drive them. Qualcomm is making such processors. As a result, demand for Qualcomm devices will increase over the next few years. Causing both higher revenues (selling more chips) and higher margins (market such chips at more attractive price points).
Big profit growth is going to follow. So there’s going to be big gains in QCOM stock.
In summary, here are the key 5G stocks to consider for your portfolio:
- Verizon (NYSE:VZ)
- MACOM Technologies (NASDAQ:MTSI)
- Apple (NASDAQ:AAPL)
- Boingo (NASDAQ:WIFI)
- Qualcomm (NASDAQ:QCOM)