About 5G technology
Before diving into the top ten 5G stocks list, let us explain to you the basics of the 5G network and what you should know about this emerging technology.
Communication technology has grown significantly since the inception of mobile communication devices. There are currently 4 generations of wireless communications technologies supporting cellular data networks. These are 1G, 2G, 3G, and 4G, which was the latest and fastest until the 5G network was launched.
5G is the 5th generation wireless communication technology that is one hundred times (x100) faster than 4G, and the new infrastructure, such as higher frequency antennas are already being built.
The advantages of this network include increased speed, lower latency, and therefore greater capacity for remote execution. Additionally, more devices can be connected with the potential for implementing virtual networks (network slicing). The lower latency means huge files or websites that require a lot of time to load will be able to load at a fraction of the time. With a 5G network, mobile applications can be executed from the cloud instead of having to install such apps or other files on mobile devices, thus saving space.
The technology also has the potential to favor the Internet of Things (IoT) as it allows the connection of up to millions of devices per square kilometer with instant access to the internet and real-time sharing of data. This is what will drive the building of smart cities in which autonomous cars can be operated and better surveillance can be carried out with camera devices fixed in strategic parts of such cities.
In spite of the seemingly great advantages that the 5G network has, there In spite of the seemingly great advantages that the 5G network has, there are concerns raised by individuals and groups, which have been strongly debated. For instance, some have connected the COVID-19 pandemic to 5G technology as its origin and may be responsible for weakening the immune system in humans.
Apart from the health concerns surrounding 5G, it is said to have negative impacts on vulnerable areas of the environment. Some researchers argue that as several devices can be connected to the network, the huge energy use can eventually contribute to global warming. There are also security concerns on the 5G network as a massive DDoS attack could easily be deployed against the network with many devices connected.
However, researchers in technology and radiation studies have expressed that the 5G does not have the capacity to cause any of the damages that it is said to cause. This is because 5G radiation is non-ionizing and does not have the kind of energy required to penetrate the human body or cause any damage to the genetic structure. This makes it impossible for the radiation to induce cancer or cause any of the other health issues being raised.
5G industry projections
Despite the growing controversy around 5G, there are investment opportunities for investors with the new technology.
The industry is expected to reach $5.53 billion in 2020 and $667.90 billion by 2026, owing to a projected Compound Annual Growth Rate (CAGR) of 122.3% between 2021 to 2026. In the long run, it is projected that the industry will contribute $13.2 trillion to the global economy and support 22.3 million jobs by 2035.
Though relatively new, it is one of the fastest-growing technology and has registered its presence in the global financial market. Stocks from different 5G companies have now gone live on 24 markets and the GSM Association (GSMA) projects that it will be 20% of global connections by 2025. The GSMA also predicts billions more IoT devices will be coming on stream over the next five years and that between 2019 and 2025, the number of global IoT connections will more than double to almost 25 billion.
As of January 2020, 5G had been deployed in 378 cities in 34 countries. The cities have varying levels of deployment with some having full deployment while others have partial deployment and more are expected to be covered. Ericsson, a Swedish telecom company projects that the network will cover 65% of the world’s population by 2025.
Additionally, our previous report has revealed that the global adoption of the 5G network is set to skyrocket in the next five years. The data compiled by Finbold.com estimates that by 2025, the number of 5G connections is expected to hit 2.7 billion worldwide, a growth of at least twenty times from this year’s figure of 120 million.
With such a promising future for the technology, its potential as an investment can hardly be debated. There are currently several 5G companies with stocks that are potentially profitable for investors in the long run. As the preparation for the full launch of the network progresses, the stocks may hold value in the near future. In this article, we will reveal our top 10 picks of the best 5G stocks to buy in 2020.
Ten 5G Stocks that have potential
Apple Inc. (NASDAQ: AAPL)
Market Cap: 1.937 trillion
Apple Inc. (NASDAQ: AAPL) is one of the largest technology manufacturers in the world. Apple designs, manufactures, and markets a variety of tech products including smartphones, computers, laptops, tablets, wearables, and accessories, as well as offering a variety of services and digital products.
Apple is most notable for the iPhone product line but also offers Apple TV, Beats products, iCloud, Apple Arcade, and a co-branded credit card, Apple Card. In addition to offering products and services, Apple also markets third-party applications through the App Store, Mac App Store, and WatchApp Store.
As an international market leader, Apple possesses a retail footprint that spans across 25 regions and countries, with over 500 stories. In addition to the 270+ Apple stores located in the United States, Apple also maintains retail 240 locations in Australia, Europe, Canada, China, Hong Kong, Japan, Singapore, South Korea, and Mexico.
The global manufacturing and assembly supply chain owned by the organization is networked across the globe, with components and products manufactured in Japan, the United States, Korea, India, and Taiwan
The smartphone arm of the company is expected to roll out a new series of 5G iPhone products in the fourth quarter of 2020, an event that is likely to significantly impact the 5G stocks ecosystem. Many analysts predict that the launch of 5G iPhones in 2020 will spark a new 5G upgrade cycle in the smartphone industry.
Apple iPhone sales beat consensus at the end of Q1 2020, approaching $56 billion. Stock buybacks and dividends of over $24 billion assisted in a 40 percent AAPL stock gain since September 2019 — combined with the launch of new services and wearable products, the launch of 5G could potentially push Apples current 1.9 trillion market cap well beyond $2 trillion before the end of 2020.
Apple currently has a market cap of $1.9 trillion — analyst insight into AAPL stocks presents a 12-month price forecast with a median target of $429, with a high estimate of $515 and a low estimate of $295.
QUALCOMM, Inc. (NASDAQ: QCOM)
Market cap: 121.81 billion
QUALCOMM, Inc. (NASDAQ: QCOM) is a US-based multinational semiconductor and telecommunications equipment manufacturer. Qualcomm develops, manufactures, and distributes digital wireless communications products and services around the world, making it a strong contender as one of the most interesting 5G stocks of 2020.
The international semiconductor manufacturer operates through several segments, which include Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), and Qualcomm Strategic Initiatives (QSI). Each segment operates in various verticals — the QCT segment is primarily concerned with the development of integrated circuits and system software for use in data and voice communications, as well as GPS products.
With few competitors, QCOM is currently the leading supplier of microprocessors in the China region, and is set to supply chips for the new series of Apple 5G iphones. The company also plans to develop and distribute a variety of 5G development platforms, such as new artificial intelligence enabled robotics products with a focus on 5G connectivity.
Analyst predictions indicate Qualcomm sales to rebound 15 percent by September 2020, with a further rebound of 22 percent in the 2021 financial year. Qualcomm has experienced strong sell-in penetration of 5G technology products through China-based 5G device manufacturers.
Qualcomm is a strongly positioned supplier, supported by offerings that span baseband, transceiver, radio frequency, front-end products, and antenna. The launch of 5G is set to support an expansion of the addressable market available to Qualcomm.
With new questions on consumer spending amidst the ongoing COVID-19 pandemic, carriers are highly incentivized to drive contract upgrades that focus on 5G integration. Qualcomm currently holds best-in-class modern technology to the communications industry, and is positioned to capitalize on the first major communications upgrade cycle in nearly a decade.
Qualcomm currently has a market cap of 121.81 billion. Expert analysis indicates a 12 month price forecast of $15, with a high estimate of $137 and a low estimate of $90.
Broadcom (NASDAQ: AVGO)
Market cap: $131.37 billion
Broadcom (NASDAQ: AVGO) is one of the largest semiconductor manufacturing businesses in the world and currently sits in third place globally after Intel and Qualcomm. Broadcom manufactures a broad spectrum of communications technology and semiconductor products including ethernet controllers, network switches, and wireless APs.
Based in the United States, Broadcom owns valuable intellectual property that it licenses to other organizations. Intellectual property and products manufactured by IP are distributed across a wide range of verticals and are used in private broadband connections, smartphones, telecommunications equipment, energy systems, factory automation, and consumer electronics.
Broadcom is currently securely positioned to benefit from the impending 2020 to 2021 5G upgrade cycle — the semiconductors Broadcom manufactures are a critical component for new 5G network deployment.
The ongoing COVID-19 pandemic has not affected Broadcom in a significant way — the company has maintained strong operations, increasing revenues by 4 percent year over year and reporting a record cash flow in excess of $3 billion — a 205 percent improvement from year-to-date numbers.
In February 2020, Broadcom announced the completion of a new 5G switching portfolio designed to deliver a feature set that meets new 5G technology standards. In March, Broadcom was highlighted by Forbes as a market leader in 5G infrastructure — in June, Broadcom was announced as the supplier of 5G chips for the new Nokia ReefShark product line.
Broadcom currently has a market cap of $131.37 billion. Expert analysis predicts a 12-month price target of $352, with a high estimate of $400 and a low estimate of $305. The median $358 estimate represents a 10 percent increase over mid-2020 prices.
Skyworks Solutions Inc (NASDAQ: SWKS)
Market cap: $23.75 billion
Skyworks Solutions Inc (NASDAQ: SWKS), like many of the other stocks in this 5G roundup, is a manufacturer of tech solutions critical to the future of the 5G industry. Skyworks Solutions manufactures radio frequency chips that are used in mobile, wireless infrastructure, home automation, automotive, and industrial applications.
Notably, the company is closely linked to AAPL, and generated over 50 percent of its revenue from Apple alone in 2019, linking it closely to its price movement. Skyworks Solutions has rallied over 30 percent in the last five years, but experienced a significant slowdown in the 2017-2018 period due to a loss of orders from Huawei subsequent to the US blacklist of the telecommunications device provider in the US.
2019 saw the international chip manufacturer recover swiftly, offsetting the loss of nearly 10 percent of all sales due to the Huawei blacklist with stronger sales of analog chips for non-smartphone applications and the sale of products designed for IoT applications.
The research and manufacturing arms of SWKS are currently executing extensive research and development of new chips to power 5G connectivity for the next generation of smartphones alongside 5G infrastructure and powerful WiFi 6 technology for a range of consumer devices.
Importantly, Skyworks Solutions maintains a zero debt balance, with short term investments held by the company valued at $1.1 billion at the close of March 2020. Beyond 5G technology, Skyworks Solutions also distributed industrial equipment and smart devices, which account for roughly 30 percent of all sales as of Q2 2020.
Skyworks Solutions currently has a market cap of $23.75 billion. Expert forecast predicts a 12-month price target of $146, with a high estimate of $170 and a low estimate of $126. The median estimate for Skyworks Solution would represent a 2.16 percent increase from mid-2020 prices.
Intel Corporation (NASDAQ: INTC)
Market cap: $206.81 billion
Intel Corporation (NASDAQ: INTC) is one of the largest tech giants in the world, and currently holds a highly secure position focused on dominating future 5G tech markets. Intel has executed and published significant market research on the future of the 5G industry, predicting that over the next decade tech providers and media platforms will compete to capture over $3 trillion in wireless revenue opportunities facilitated by 5G networks.
In February 2020, Intel announced a new line of chips targeting 5G network infrastructure. The new Atom P5900 10nm system on a chip designed for wireless base stations is designed to dominate the base station sector, with Intel aiming to capture the position of the leading silicon provider for 5G base stations in 2021.
The new chip is positioned to target high bandwidth, low-latency base stations — Inten expects a target market of over 6 million new 5G base stations though to 2024. In addition to the new Atom chip, Intel is set to launch a new generation of Xeon scalable processors that are anticipated to transform the virtualized network market, delivering a growth rate of 80 percent.
Intel has already demonstrated a 40 percent increase in size since 2014, scaling revenue from $1 billion to $4 billion in 2019. The upcoming global rollout of 5G is expected to increase demand for cloud-based network services, of which Intel is currently a market leader.
To date, Intel has secured two large telecom equipment manufacturers with new tech designed to increase the efficiency of 5G base stations, anticipating a 40 percent market share by 2022 — placing Intel in a strong position as a transformative market leader in the upcoming 5G evolution.
Intel Corporation currently has a market cap of $206.81 billion. Exper price analysis places a 12-month median price target at $56, with a high prediction of $82 and a low estimate of $45.
CEVA (NASDAQ: CEVA)
Market Cap: 987.72 million
Ceva (NASDAQ: CEVA) has grown to become one of the top stocks in the 5G technology sector. The company behind it, Ceva Inc is a U.S-based technology company that specializes in semiconductors. It serves as a licensing company for signal processing platforms and artificial intelligence processors for semiconductor companies and original equipment manufacturers (OEMs) serving the mobile, consumer, automotive, industrial, and Internet-of-Things (IoT) markets worldwide.
Formerly known as ParthusCeva, Inc., it also offers licenses to signal processing intellectual properties (IPs), including platforms for 5G baseband processing. This covers signal processing for handsets and base station RAN including integrated cellular IoT solutions; digital signal processor (DSP) platforms incorporating voice input algorithms and software for voice enabled devices and a host of others.
Its services also include provision of internet protocols (IPs) for Bluetooth and Wi-Fi platforms worldwide. It licenses its technologies to companies that design, manufacture, market, and sell application-specific integrated circuits and application-specific standard products to wireless, consumer electronics, and automotive companies for incorporation into various end products. Its technologies are licensed via direct sales force.
The company recently won the CEM Editor’s Choice Award for its Bluetooth 5 IP which was selected as the most competitive IoT solution in China. Also early this month, the Ceva announced its first high performance Sensor DSP Hub, SensePro, a family that serves as hub for processing and fusing of data from multiple sensors including camera, Radar, LiDAR, Time-of-Flight, microphones and inertial measurement units.
According to the analysts, 12-month price targets for Ceva are $60 (high forecast) and $34 (low forecast) with an average price target of $44.
Verizon Communications Inc. (NYSE: VZ)
Market Cap: $250.12 billion
Verizon Communications Inc. (NYSE: VZ) has set itself apart as one of the top companies in the 5G industry and its stock is one of the leading ones with a promising future. First founded in 1983 as Bell Atlantic Corporation, its name was changed to Verizon Communications Inc. in June 2000. Its clients include consumers, businesses, and governmental entities to whom it offers communications, information, and entertainment products and services worldwide.
Consumers patronise services such as postpaid and prepaid service plans, Internet access on notebook computers and tablets, mobile devices, and other wireless-enabled connected devices such as smart watches and other wearables.
Verizon Communications also provides internet connectivity, video, and voice services for homes as well as virtual networks to mobile virtual network operators. As at the end of 2019, it had about 95 million wireless retail connections, 6 million broadband connections, and 4 million Fios video connections.
Its business segment provides network connectivity products, including private networking, private cloud connectivity, virtual and software defined networking, and Internet access services; and Internet protocol-based voice services, unified communications and collaboration tools, and customer contact center solutions.
It also offers a range of management and data security services; domestic and global voice and data solutions, including voice calling, messaging services, conferencing, contact center solutions, and private line and data access networks; customer premises equipment; installation, maintenance, and site services; and IoT products and services.
As at 31 December 2019, the segment had 25 million wireless retail postpaid connections and 489 thousand broadband connections and is expanding its reach with a strategic partnership with HERE Technologies and Dignitas as well as with Emory Healthcare to develop and test 5G Ultra Wideband-enabled use cases.
The company recently acquired enterprise-grade video conferencing and event platform Bluejeans to expand its immersive unified communications portfolio, making the stocks to have a brighter future. Verizon ended 2019 with the highest Q4 with the highest wireless adds, increased cash flow and revenue growth in 6 years and 2020 may still be better.
VZ stock is expected to hit $62.30 on average based on its 12-month price projection with a high of $70.00 and a low of $57.00.
Inseego Corp. (NASDAQ: INSG)
Market Cap: $1.26 billion
Inseego Corp. (NASDAQ: INSG) is a United States technology company specializing in communications equipment. It is involved in design and development of mobile, Internet of Things (IoT), and cloud solutions which are important services in the growing digital global economy. Its products include among others 4G and 5G fixed wireless routers and gateways.
It provides wireless 3G, 4G, and 5G hardware products for vertical markets, including private LTE/5G networks, First responders network authority/Firstnet, SD-WAN, telematics, remote monitoring and surveillance, as well fixed wireless access and mobile broadband devices. The company currently has over 50 service provider partners. It also has a delivery system fully protected that has traveled over 6 billion miles for delivery of its products.
Inseego announced its Q1 2020 preliminary revenue which it expects to exceed the current consensus of $52 million. Since early March, it has seen rising demand for its mobile connectivity products. On April 1, the company announced it was scaling up its production of 4G and 5G MiFi mobile hotspots and other wireless connectivity devices to meet the unprecedented surge in demand. It was attributed to the increasing need to work online for individuals, private companies as well as government agencies due to the COVID-19 pandemic.
Because of this rising demand, Inseego Incorp. expects a significant surge in its revenue for the whole 2020 as the demand for copmany’s products are expected to keep rising as the COVID-19 pandemic continues to spread to more places.
Analysts place the 12-month stock price target for INSG stock at $12.10 with a high of $13.50 and a low of $10.00. The sentiment right now indicates a moderate buy, making it a good prospective investment and a good choice to buy in 2020.
Inphi Corporation (NYSE: IPHI)
Market Cap: $5.81 billion
Inphi Corporation (NYSE: IPHI) is a U.S-based technology company that specializes in semiconductors. Formerly known as TCom Communications, Inc., the company changed its name to Inphi Corporation in 2001 after it was incorporated in the year 2000.
It produces 10G-600G high-speed analog and mixed-signal semiconductor components and optical subsystems to networking original equipment manufacturers (OEMs), optical modules, cloud and telecom service providers.
The semiconductor solutions provided by Inphi Corporation solves the problem of bandwidth bottlenecks in networks, maximize throughput and minimize latency in computing environments, and enable the roll out of communications and datacenter infrastructures.
Inphi Corporation products help in amplifying encoding, multiplexing, demultiplexing, and retiming signals at speeds up to 400 Gbps and also provides 25G to 600G high-speed analog and mixed semiconductor solutions for the communications market. Customers who are original equipment manufacturers buy products directly or through a network of sales representatives and distributors.
In its bid to expand, the company in partnership with Synopsis acquired eSillicon, a fabless semiconductor company founded in 2000. The acquisition expanded Inphi’s capacity for 2.5D packaging, SerDes and Custom Silicon design products. In early March, Inphi unveiled its new Spica 800G 7nm PAM4 DSP which is the world’s first 8x100Gbps PAM4 DSP for megascale data centers and AI networks.
In Q2 of 2020, the company announced the pricing of $440.0 million aggregate principal amount of 0.75% convertible senior notes due 2025. Is estimated to rake in net proceeds of $428.2 million.
IPHI average 12-month stock price target stands at $120.04 with a high forecast of $164.00 and a low forecast of $112.00. Market sentiment for the stock is currently at strong buy which indicates this may be a good time to keep an eye on this stock.
MACOM Technology Solutions Holdings, Inc. (NASDAQ: MTSI)
Market Cap: $2.69 billion
MACOM Technology Solutions Holdings, Inc. (NASDAQ: MTSI) is another technology company based in the United States. It specializes in semiconductor devices and components and was the largest private employer in the United States in 2005.
It currently has design centers and sales offices in North America, Europe, Asia, and Australia. Products include semiconductor technologies for optical, wireless, and satellite networks with a portfolio of analog RF, microwave, millimeter-wave, and photonic semiconductor products.
Its clients include consumer electronics companies but its products are mainly used in commercial and industrial applications. This application covers key industries such as aerospace and defense as well as climate monitoring, satellite applications, data centers, long-haul communications, metro core networks, 5G, and fiber-to-the-X/PON and industrial and defense, including military and commercial radar and sells its products directly through sales force, applications engineering staff, independent sales representatives, resellers, and distributors.
With its impact in the industry, MACOM bagged a Technology & Engineering Emmy Award for its development of technology that enables high density video switching and routing solutions in 2015.
Like Inphi, MACOM announced a new technology, a dual-channel 96 Gbaud trans-impedance amplifier (TIA) and a quad-channel modulator driver for 600Gbps and 800Gbps Optical Networking Applications early this month.
According to analysts’ projection for the MTSI stock, its average 12-month stock price target is $43.38. It is also projected to have a high of $53.00 and a low of $35.00.
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FAQ About 5G Network
What is 5G?
5G is the new 5th generation of wireless communications technologies supporting cellular data networks. It is the latest and most advanced of the networks in existence such as 1G 2G, 3G and 4G. 5G requires devices that support the technology to function and is already available for use in a good number of countries in the world. It exists in millimeter waves, mid-band, and low-band, but the mid-band is the most widely deployed in over 30 networks.
How does 5G differ from 3G and 4G?
5G is a much faster network, about 100 times faster than 4G and much faster than 3G. Its speed goes as high as 100 gigabits per second. It also has lower latency i.e it takes much less time to load files and websites. Because of the short millimeter waves, it allows many more devices to be connected at the same time.
Does 5G raise any health concerns?
Yes, there are health concerns raised by researchers and the general society on the dangers that technology poses to human health. It has also been blamed for the COVID-19 pandemic that is currently ravaging the world. However, experts in the field of communication technology say these concerns are unfounded. They say that unlike sun rays and X-rays, 5G radiation is non-ionizing and so does not have the capacity to cause any real damage to health.
Will 5G use current 4Gs antennas or the new infrastructure will be built?
5G requires new infrastructure mainly because of the differences between the 4G or 3G networks. Because of the shorter wavelengths and higher frequencies, antennas can be much smaller than 4G antennas. Since there are not many of such antennas that support such high-frequency transmission, many more will have to be built for the technology to be fully deployed.