Are these the best 5G stocks to watch? (2024)

What's on this page?

1. Top 5G stocks to watch
2. How to invest in or trade 5G stocks
3. 5G and the fourth industrial revolution
4. 5G stocks: looking at the bigger picture

10 top 5G stocks

1. Apple
2. Xiaomi
3. Qualcomm
4. Taiwan Semiconductor
5. Qorvo
6. Intel
7. T-Mobile
8. BT Group
9. Deutsche Telekom
10. Ericsson

Apple

Apple didn’t rush to market with a new phone when 4G was initially launched and expectations were the same for the 5th generation mobile network (5G). True to this, the company released its first 5G supported phones with the launch of the iPhone 12 model over a year. It also rolled out 5G connectivity to certain cellular network providers within the same period.

This came after its main rival, Samsung, had already unveiled its 5G-enabled models – the S20, S20 Plus, S20 Ultra and a newer version of its Note. This was believed to be an indication that Samsung, which sells more smartphones worldwide than any other device maker, could capture the early adopters of 5G technology and take an early lead.

Apple reported a general decrease in the net sales of iPhones, Macs, wearables, home and accessories in the first half of FY2023. In its quarter two (Q2) financial results for 2023 (FY23) ended 1 April 2023, Apple reported that its quarterly revenue was decreased by 3% year-on-year (YoY) to $94.8 billion, while its quarterly earnings per diluted share remained unchanged at $1.52 YoY.¹

Despite the lower net sales of iPad mini, there was an increase in YoY net sales of iPads (Pro and Air) in the initial six months of FY23 compared to the same period last year.¹

Xiaomi

Xiaomi is the largest smartphone seller in China and has taken a serious slice of the pie in other markets too, becoming one of the top-selling smartphone providers in India.

A couple of years back, Xiaomi became the largest consumer ‘Internet-of-Things’ (IoT) company in the world. It made headlines for introducing the cheapest 5G phone selling at prices close to manufacturing costs, undercutting rivals in terms of price. This is why it has performed particularly well in emerging markets.

But in FY22, the company saw a decline in Xiaomi’s smartphone sales, leading to mass layoffs at the company. In its Q4 FY22 financial results, the company reported that smartphone sales decreased by 22.8% from 85.58 billion yuan a year earlier to 66.05 billion yuan ($9.6 billion).²

The drop was mainly due to the Covid-19 infection rate cycles in 2022, which resulted in a slump in production coupled with cautious spending by consumers dealing with a slow economy. With the global pandemic recently being declared over in May 2023 and the economy opening up, smartphone sales are likely to see a significant increase going forward.

Qualcomm

Qualcommtook an early lead in 5G, supplying numerous 5G-enabled modems, modules and processors. Qualcomm’s Snapdragon 888 processor, for example, is used by a string of big brands, including Xiaomi, ASUS, Samsung, Lenovo and Sony.

Its equipment isn’t only used in smartphones, but also forms an important part of everything from gaming PCs to autonomous vehicles, making it a key supplier as the world continues to embrace 5G. This isn’t surprising as the company stated that it expects its equipment to be used by industry segments beyond traditional cellular industries, such as automotive, computing, IoT and networking.

Taiwan Semiconductor

Taiwan Semiconductor Manufacturing Co Ltd (TSMC) is one of the world’s largest semiconductors chipmakers. The company has said recent growth has been driven by demand for high-end smartphones as well as the initial roll-out of 5G.

With hundreds of clients, including Qualcomm, Nvidia, and Advanced Micro Devices (AMD), the company’s biggest customer – Apple – accounts for around one-fifth of sales. In early 2022, TSMC squeezed out Samsung to become the sole manufacturer of 5G Radio Frequency (RF) chips for Apple’s iPhone 14.

In Q1 FY23, TSMC forecast a 16% decline in sales for Q2 as it predicted that consumers would likely continue to struggle with a slow demand due to an inventory oversupply amid a weakening global economy.³

Qorvo

Operating in the same semiconductor industry,Qorvo is often compared to Skyworks Solutions. Not only are they both major suppliers to Apple, they’re also each other’s biggest competitors. The stark similarities that have secured the main competitor role between these companies means that it’s constant a race of who has better differentiating factors and the upper competitive advantage hand.

Like Skyworks Solutions, Qorvo supplies RF chips and other equipment, making it well-placed to benefit from 5G technology. While Qorvo generates more than 70% of its revenue from the mobile business area, this figure is slightly lower for Skyworks Solutions. Other applications of Qorvo technology includes industrial robotics, autonomous vehicles, smart homes and virtual assistants.

Intel

A year before the outbreak of the global Covid-19 pandemic, Intel, one of the world’s largest semiconductor chip manufacturer, sold off its smartphone modem business to Apple for $1 billion along with 2200 employees, equipment and intellectual property. The sale was mainly to the high costs that came with supporting Apple who was at the time its sole customer.

With over 100,000 remaining employees following the sale, Intel continues to provide computer software, IoT devices and other data-centric devices and solutions. Included in this has been the company’s focus on 5G – powering fifth generation networks and partnering with Google to speed up the roll-out of those devices. Its focus is also to demonstrate the benefits of the fourth industrial revolution through building a 5G smart factory, and more.

As part of is cost reducing exercise, the company announced an organisational change that would integrate its Accelerated Computing Systems and Graphics Group into its Client Computing Group (CCG) and Data Center and AI (DCAI) Group.⁴

In its Q1 FY23 financial results, the company reported that DCAI anticipated the delivery of Emerald Rapids, Intel’s 5th Gen Xeon Scalable processor based on the Intel 7 node, later in the year. In addition, the business narrowed the delivery window for Sierra Forest, which is expected to ship to customers in H1 FY24, with Granite Rapids expected to follow shortly thereafter.⁴

T-Mobile

In a bid to become a leader in 5G,T-Mobile US merged with Sprint in 2020 following a two-year-long legal wrangling. With its merger valued at $26 billion, the telecoms company committed to invest around $40 billion to rapidly build out a nationwide 5G network by 2024. T-Mobile said the combined group will have ‘double the total capacity and triple the total 5G capacity’ than it would have as a standalone business.

By the end of FY22, T-Mobile had completed the majority of its 5G network upgrade, which gave the company a network – and a market cap – to rival multinational telecommunications company AT&T and wireless network operatorVerizon. Sticking with the T-Mobile brand, the previously third and fourth largest carriers in the US are now better positioned to rival the two leaders in the US, Verizon and AT&T. Still, T-Mobile has a lot of work to do to overtake its two biggest rivals.

BT Group

In the UK,BT Group has a distinct edge over any other telecoms company because it’s responsible for operating Openreach, the nationwide broadband network that other carriers must piggy-back off.

Expanding its full-fibre broadband and 5G network at the heart of its strategy, so BT aims to offer the ‘best converged network’ possible, boosted by its ownership of EE. It has said that the performance of its 5G network is ‘ahead of the competition’.

In H1 FY22, BT Group entered into a first-of-its-kind partnership with Ericsson to provide commercial 5G private networks for the UK market. BT has also pledged £100 million over the next three years to accelerate the development of costumer solutions which integrate technologies such as 5G.

Deutsche Telekom

Deutsche Telekomis the largest telecoms company in Europe. Germany is its core market, but it makes more than two thirds of its revenue elsewhere, including the UK, wider Europe and the US. With a controlling stake in T-Mobile, the company is looking to become the majority stakeholder by 2024.

In Germany, the company is turning to the model deployed by BT, whereby it operates a central network that other companies, like Telefonica, can use. It also intends to provide 5G coverage to 99% of the country by 2025. By the end of FY22, it had reached 94% of the country. The country’s international leadership, with strong footholds in the US and Europe, gives the company diversity and the resources needed to deliver its 5G plans.

Ericsson

By the end of FY22,Ericsson had over 140 live 5G networks operating in more than 60 countries (as of December 2022), as well as over one hundred commercial deals. The telecoms company stated that it was the first to deploy functional 5G networks across four continents.

Almost two years prior, Ericsson had secured a contract with Asia Pacific Telecom (APT), enabling it to modernise its 4G LTE networks in Taiwan. The nationwide upgrade kicked off with the country’s first 5G non-standalone (NSA) multi-operator core network (MOCN).

The launch of the 5G MOCN in Taiwan enabled the company to maximise the effectiveness of the existing network infrastructure,significantly increasing 5G availability across the island. The company has predicted that there will be more than 5 billion 5G subscriptions by the end of 2028.

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How to invest in or trade 5G stocks

With us, you can follow these steps to invest in or trade 5G stocks:

1. Do your research on 5G thematic stocks
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3. Choose whether to invest or trade
4. Pick your 5G stock
5. Open and monitor your position

When you invest, you own the underlying shares in the company outright and are entitled to any dividends that are paid (if granted by the company).

Possible share price appreciation means that you can also make a profit by selling at a higher price. As the potential for share prices to rise is technically unlimited, this also applies to your profits. Your losses, are however, capped at your full initial outlay (excluding any additional fees). You’ll incur a loss if you sell your investment at a price that’s lower than the original buy price.

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Leverage allows you to get full exposure while only committing a deposit, called margin. Regardless of this, your possible profits and potential losses will be in line with the full value of your trade, making it vital that you manage your risk properly.

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5G and the fourth industrial revolution

At its peak, 5G is expected to be up to 100 times faster than 4G.

But 5G is about much more than downloading films quicker or delivering faster connectivity on your smartphone. It marks a huge technological jump that’s expected to have a big impact on what’s being dubbed ‘the fourth industrial revolution’. It’s said that 5G will unlock a wave of new technologies, spanning everything from artificial intelligence (AI) and machine learning to automation and autonomous vehicles.

Apart from better speeds, the other major benefit of 5G is lower latency, which is how long it takes between sending an instruction, like opening a smartphone app, and for that instruction to be completed.

Existing 4G networks have cut down latency to as low as 50 milliseconds, but 5G has the potential to reduce this to around one millisecond.

Fractions of a second may seem insignificant, but quicker download speeds are nothing without better latency, and the anticipated improvement is so drastic that 5G will be capable of handling critical tasks that current networks simply can’t. Driverless cars are a prime example: 49 milliseconds is a huge amount of time for a self-driving vehicle responding to potential incidents on the roads.

5G mobile phones and devices

The faster connectivity that 5G brings is already being experienced through the everyday devices that we use, ie smartphones, tablets, wearable tech and other smart technology. 5G-enabled devices mean smarter and faster technology that’s capable of offering a wider array of services.

With little incentive to spend significant sums on new devices that offer limited improvements from existing ones, consumers often wait longer to upgrade. 5G is changing this. For example, new smartphone releases with upgraded camera capabilities vs 5G-enabled smartphones.

5G chipmakers

The widespread, ongoing adoption of 5G means there’s a market for a swathe of supplementary smart tech – such as chips. This is evident through the success stories of those companies providing crucial components to power all devices that bring 5G to life for individuals and businesses.

5G carriers

The telecoms industry is at the heart of 5G – providing the wireless networks that supply 5G to people and organisations. A big part of this has been building the infrastructures to secure the radio frequency capacity that forms the backbone of the services it provides to customers.

The deployment of 5G networks has been a differentiating factor for many telecoms companies. Further, 5G enables the industry-wide strategy of convergence, whereby you increase the stickiness of a customer by selling them multiple services (eg phone, broadband and TV packages). If customers flock to one telecoms provider because of its 5G network, they’re more likely to buy other services from that company, too.

Demonstrating the ability to provide a reliable and superior 5G network is likely to continue being crucial in securing customers over the initial years. This is particularly true when it relates to mission-critical and high-end applications.

5G infrastructure providers

5G requires a lot more infrastructure than 4G, because it needs to run on higher radio frequency bands to deliver faster speeds. But transmission and coverage both suffer as the frequency increases.

This means more sites (often called small cells) are needed to transmit signals in buildings and on the streets, which require much more infrastructure to be built. So, whereas lower frequencies can cover a wider area, 5G needs more connections to make the network work properly. With more sites being added to carrier networks, the rollout kicked off with deployment in densely populated areas.

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5G stocks: looking at the bigger picture

In under three years since the first launch of 5G technology, companies that are responsible for bringing it to life have already been investing huge sums, and even sacrificed returns over the short to medium term.

With some having already suffered a decline in earnings that has spiralled into suspended dividend pay-outs and other impacts, this highlights the importance of giving due consideration to sustainability.

The returns reaped from 4G haven’t been as good as the industry expected and businesses will be keen to not have a repeat of the situation. Still, investors aren’t short on options when it comes to investing in 5G and it may be wise to look at the bigger picture – beyond those building and supplying 5G networks.

There are a huge number of industries that stand to benefit from 5G, everything from internet and data stocks, cloud-computing firms and gaming companies to carmakers, AI and automation technology firms, and smart and IoT device makers.

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Footnotes:

¹ Apple, 2023
² Reuters, 2023
³ Reuters, 2023
⁴ Intel, 2023
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