5G stocks to buy and watch as 2022 smartphone forecasts come down
The best 5G stocks will evolve over time as enterprise services delivered via cloud computing usurp consumer applications.
Investors should keep an eye out for updates on company earnings calls as more smartphones, laptops, cars and internet-connected industrial devices adopt 5G technology.
T Mobile USA (TMUS) And Verizon Communications (vz) continue to expand 5G wireless broadband services for homes. They offer discounts on bundles of 5G broadband and cellular services.
“Fixed Wireless is the first killer 5G app, and enterprise 5G will be next in 2024,” Oppenheimer analyst Tim Horan said in a note to clients.
iPhone manufacturer Apple (AAPL) is always worth considering as a 5G stock.
5G Stocks: Smartphone Outlook
Meanwhile, Apple’s stock supply chain is a seasonal and cyclical opportunity for investors eyeing 5G stocks.
chip manufacturer Qualcomm (QCOM) has warned of a slowdown in global smartphone sales.
T-Mobile is up 7% in 2023 after rising 22% last year. TMUS stock holds the most 5G wireless spectrum among US service providers.
Telecom network equipment manufacturers expect spending on 5G infrastructure to slow in 2023 after booming this year. However, companies like Verizon are finally shifting traffic to standalone 5G “core” networks. This affects what types of networking equipment they buy.
Semiconductor stocks offered an early game with 5G wireless and remain an opportunity. Investors have been wary of 5G network equipment manufacturers and other infrastructure providers such as cell tower operators.
Cloud computing, 5G wireless synergy
In the long term, 5G wireless services will be delivered via cloud computing giants such as Amazon.com (AMZN), Microsoft (MSFT) And Alphabet’S (Google) could offer Google the best 5G stocks. Many startups are active in “Edge Computing”. Cloud computing infrastructure is expected to play a major role in the delivery of 5G wireless services.
“Over the past several years, all major telecom operators have signed partnerships with the top cloud experts to help deliver greater network efficiencies, lower latency and faster speeds while enhancing the overall 5G ecosystem,” Wedbush analyst Daniel Ives said in a note.
He added, “The opportunity for cloud providers comes from edge computing, which brings computing power closer to customers’ devices for better performance. As the push for 5G continues across the country, there is clearly a multi-billion dollar opportunity for cloud providers to win.”
Research firm Dell’Oro forecasts that 5G workloads in the public cloud will grow revenue at a compound annual growth rate of 88% from 2022 to 2026. Dell’Oro estimates cumulative sales during this period at $4.6 billion.
5G Stocks: Investment Jumps in 2022
South Korea and China lead in 5G network coverage while Europe lags behind.
Analysts expect 2022 to be a big year for US wireless carrier investments. Some 5G stocks should get a boost as telcos increase spending on those networks.
Credit Suisse expects wireless investment to hit a record $39.4 billion in 2022.
Led by T-Mobile, wireless carriers across the United States are deploying 5G wireless services using high-performance mid-band radio spectrum. Verizon and AT&T (T) are playing catch-up and will spend the most in 2022 and 2023.
dish networks (COURT), a satellite TV service provider continues to roll out a 5G wireless network
Best 5G Stocks: Multi-year boom for chipmakers
Smartphones are currently driving the biggest demand for 5G chips.
Research firm Omdia predicts that by 2026, 40% of all mobile subscriptions will be 5G, totaling 4.8 billion. In addition, the annual revenue from 5G mobile services is expected to reach US$540 billion worldwide by 2026, accounting for 60% of revenue.
With the Chinese market already highly penetrated, Barclays expects India to be the fastest growing 5G smartphone market from 2022 to 2024.
Besides Qualcomm, there are other companies that make chips built into smartphones Korvo (QRVO), Marvell Technologies (MRVL), Skyworks solutions (SWKS) cirrus logic (CRUS) And Analog Devices (ADI).
Naysayers still question the viability of 5G investments for telcos. They point to the lack of a 5G “killer app” for consumers.
The corporate market could be a revenue driver
A wide range of technology companies are building 5G ecosystems for private networks that provide business-to-business services. Telecom industry group 5G Americas forecasts that the addressable market for integrating 5G into private enterprise networks will grow sharply over the next five years, from $1.9 billion in 2020 to $16.9 billion in 2025.
In many industrial settings, 5G infrastructure is expected to displace Wi-Fi based services.
Experts expect 5G wireless to play a role in factory automation, cloud gaming, autonomous vehicles, drones and remote healthcare services.
Over time, the breadth of 5G stocks will increase. The future of 5G wireless lies in industrial internet of things, healthcare, drones and robotics, autonomous driving, smart cities and more.
For some 5G stocks, the long-term opportunity will be tied to new networks that blur the line between wireless and fixed-line infrastructure.
Some chip makers sell in the 5G network equipment market. These include Marvell, Broadcom (AVGO), intel (INTC), Texas Instruments (TXN) and analogue devices. In the meantime, Xilinx (XLNX) manufactures programmable chips that are built into prototype network devices.
5G networks require fiber optic technology
The global 5G wireless access market will grow to $21 billion in 2024, up from less than $4 billion in 2019, forecasts research firm Omdia.
In addition, 5G is also a long-term opportunity for network equipment makers Ericsson, Nokia and Samsung.
Cell tower operators American tower (GOVERNMENT OFFICE), Crown Castle and SBA communication (SBAC) could also get a 5G boost, according to analysts. Crown Castle becomes a 5G infrastructure partner of Dish Network.
5G networks will be connected to fiber optic networks for “long-distance” purposes. This provides reliability for new automotive, robotics and medical applications. Potential 5G stocks to buy include corning (GLW), Ciena (CIEN) and other fiber optic players.
Crown Castle manufactures “small cell” radio antennas for 5G services in urban areas. Suspended from utility poles or building rooftops, the small-cell antennas require fiber optic connections to local hubs. However, local government approval is required for the rollout of 5G networks.
Rysavy Research predicts that there will be 1 million outdoor small cells in the US by 2028, 10 times more than today.
How 5G Wireless will change cloud computing
Edge computing employs data processing, storage, and connectivity near sensors and where other data originates, near the “edge” of the network. The aim is to process and analyze data locally in real time instead of sending it to remote data centers in the Internet cloud.
“The advent of 5G should mean the introduction of many new technologies that we certainly haven’t imagined,” said economist Ed Yardeni in a recent report. “To make it possible, tech gurus say cloud computing will be shifted from a distant cloud server to devices on the edge of a neighborhood network. Edge computing should continue to increase the speed of data transfer, but carriers will have to open their wallets to make it happen.”
Microsoft sells global network transport and routing services to 5G network operators. Microsoft calls the initiative “Azure for Operators”. Microsoft bought AT&T’s network cloud business.
Wireless companies find cloud partners
Amazon Web Services and Google also sell 5G-related cloud infrastructure services. AWS announced plans to sell private 5G network services to enterprise customers in December 2021.
AWS’ 5G in a box service will initially use shared CBRS spectrum. In the long term, Amazon could work with Dish for a 5G network, analysts speculate.
Verizon has partnered with AWS, Google and Microsoft to develop 5G cloud services.
Edge computing should be a big opportunity for chipmakers Nvidia and Intel, some analysts say. Nvidia and Intel are the largest providers of data center processors for cloud applications.
Mini data centers in neighborhoods are connected to the cloud computing infrastructure. Nokia and Ericsson are developing 5G cloud gateways.
Dell Technologies (Dell), Hewlett Packard Enterprise (HPE), Nokia and others aim to capitalize on edge computing.
Follow Reinhard Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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