Last Updated on August 3, 2021 by Henry John
Hitting the ground running, this article is a direct and comprehensive guide on how to invest in 5g stocks by building a strategically diversified 5g portfolio.
I will walk you through the different markets that will grow in size significantly as a result of the deployment of 5g network technologies.
And point out which companies are most likely to benefit the most consequently. Point out the forerunners and likely winners in each 5g market segment to enable you to build a strong and winning 5g portfolio.
To invest in 5g stocks, there are five types of companies you should consider investing in, namely; 5g infrastructure companies, 5g network carriers, 5g chip makers, 5g device manufacturers, and other companies whose product/service (existing or new) will be boosted as a direct result of 5g deployment.
The pandemic, like it did many other things, delayed the rollout of 5g network technologies worldwide. However, 5g companies are not relenting in developing and rolling out their various 5g technologies.
Because, there is an industrial-wide consensus that 5g is the very next big thing, and tech companies don’t want to miss out on billions of dollars (potential growth) for years.
5g will roll out like skyscrapers are built: One floor at a time.
Here is how to invest in 5g technologies by building a strategically 5g diversified portfolio:
1. Invest in 5g Infrastructure Companies
On the frontline of 5g rollout are 5g infrastructure companies.
5g infrastructure companies are the providers of 5g network equipment (such as radio hardware and base stations) which network carriers, like Verizon Communications, use to offer 5g network services to their customers.
Ideally, 5g infrastructure companies are the first to benefit massively from the rolling out of 5g network technologies. As such, it is not unexpected that 5g infrastructure companies are getting contracts worth billions of dollars and are making billions supplying 5g network equipment today.
It is relatively easy to analyze 5g infrastructure stocks and have a clear view of how much revenue they can generate in the coming years by looking into the worth and length of their 5g contracts.
For instance, Ericsson (the leading force in the 5g infrastructure market) has already won 100 5g contracts, including contracts with major network carriers worldwide who have signed up to use Ericsson’s 5g infrastructure equipment to build their 5g networks.
Best 5g Infrastructure Stocks
Based on a number of factors which include market position, technological strength, and political alliances; Ericsson and Nokia are the best 5g infrastructure stocks to buy and hold for the long term.
Ericsson is hands down the number one 5g stock to buy now, however, to reduce risks, hedging it with Nokia in the 5g infrastructure space will secure your position.
There aren’t many major players in the 5g infrastructure market, only Huawei (a company being forced out of the global market by the US government) and Samsung are the other major players. (Top 5g Infrastructure Companies)
2. Invest in 5g Network Carriers
5g network carriers are responsible for setting up 5g network infrastructures in collaboration with 5g infrastructure companies. They are also directly responsible for delivering 5g networks to end-users (consumers).
Network carriers will make a lot of money offering various 5g packages to consumers; basically offering 5g network access through limited data plans. US carriers have long moved away from offering unlimited data plans to a business model that sees them selling limited data plans that exhaust with usage or expire with time.
However, as critical as network carriers are in the rolling out of 5g technology, 5g network deployment from historic data may not lead to massive growth for network carriers. Especially in countries with established nationwide internet coverage, with little to no room for growth.
When 4g network was rolled out, existing customers of network carriers just migrated to it, abandoning their previous 3g network plan. Hence, many companies benefitted from 4g deployment, network carriers didn’t benefit as much.
For customers of 5g network carriers, moving over to 5g will be like updating an outdated Google app; there will be significant changes in features and nothing much. It’s not like the cost of using a 5g package will be significantly higher than the cost of using 4g packages.
What most network carriers will gain from 5g rollout is a competitive advantage, with little revenue growth as a result. This explains why the stock of most network carriers in the US didn’t grow significantly with the deployment of 4g network.
5g network technology might increase the customer base and potential revenue of Network Carriers that move fast in establishing high quality 5g networks before their major competitors. And this is where the gold is investing in 5g network carriers.
Best 5g Wireless Network Carriers Stocks
Major US carriers like Verizon Communication, AT&T, and T-Mobile are expanding their 5g network coverage despite physical damages to their 5g towers by conspiracy theorists and the pandemic slowing down deployment.
Looking at market positions and the company’s track record, T-Mobile and Verizon are the best 5g Wireless Network Carrier stocks to invest in. AT&T has a weakened market share and a poor track record that puts it out of consideration for a play in the 5g network carrier space.
It’s a race for dominance for these major carriers, because, dominance is the guaranteed way to massively gain from 5g deployment.
Dominance for these Network carriers means, retaining their existing customers and aggressively gain new customers from other carriers who are either slow in deploying 5g or have a poor 5g network.
Lots of moves have been made in this regard, and the biggest is the Sprint and T-Mobile merger, a merger that saw T-Mobile become a formidable competitor and puts it in a leading position to dominate.
3. Invest in 5g Chip Makers
5g chips are vital to the development and successful deployment of 5g technologies, creating a market estimated (before the pandemic) to be worth $2 billion in 2020 and projected to reach $22.41 billion by 2026.
Most devices, machines, or platforms (from 5g mobile phones to self-driving vehicles) that will use 5g networks will need these 5g chips to function as expected.
For some perspective on how big an impact, 5g chips will have on 5g chip companies, Qualcomm’s Q3-2020 revenue was $4.89 billion. Imagine what a majority share of $22.41 billion by 2026 can do to Qualcomm’s stock in addition to its other streams of revenue.
5g chip market revenue potential will blow up stocks of leading (dominating) chip makers in the space now just now, but for years to come.
Best 5g Chip Stocks
Qualcomm has exerted a dominant hold on the 5g chip market in almost all niches. It currently has dealt with most major phone makers who are getting ready to launch their 5g phones this year and next, and with other companies developing varying 5g devices.
Qualcomm is hands down the best 5g chip stock to buy now and hold for the long term. The only company that comes close is MediaTek, and it’s easily the second-best 5g chip stock.
MediaTek stock has grown over 35% YTD. However, it’s a Taiwanese semiconductor company that is listed only on Taiwan Stock Exchange, and to buy its stock you will need an account with international brokerages like TD Ameritrade and InteractiveBrokers.
4. Invest in 5g Device Stocks
At the end of the 5g rollout are companies manufacturing 5g devices (especially smart devices), like 5g phones.
Manufacturers of existing smart devices that rely on 3g/4g networks will develop a newer model that will be compatible with 5g and harness the power of the technology to perform better.
Hence, the smart device market will be flooded with devices that come with a ‘5g tag’ (5g phones, 5g smart TVs, 5g this, and 5g that).
Best 5g Device Stock
Generally and specifically for the 5g phone market, the Apple stock is the best 5g stock to buy and hold for the long term. Apple has their hands on many things 5g and are going to be among the top companies that will benefit from the deployment of 5g technology.
Almost every major Apple device will eventually have a 5g model, more revenue stream for Apple, and more reason for Apple’s stock to continue on its upward trend.
5. Invest in companies that need 5g for growth
Like 3g and 4g, 5g is going to speed up the development and deployment timeline of many technologies and consequently spark growth for companies developing these technologies.
Will YouTube or Instagram be what and where they are today without 3g/4g tech? They definitely would not be.
3g and 4g lead the movement of internet traffic to mobile and boost mobile technologies, 5g is going to market smart devices/systems more secured and increase the ability of their AIs.
From this spectrum, stocks like Alphabet, Amazon, and Tesla that are involved in the development of self-driving technologies have the potential to grow massively long-term if 5g helps them bring self-driving technology to the general market.
Amazon and Alphabet especially are heavily involved in the development of various smart devices that will benefit massively from 5g, making them the two favorite stocks in this category.
Overall, here are the 10 best 5g stocks to invest in:
- #1 Ericsson
- #2 Apple
- #3 Nokia
- #4 Alphabet
- #5 Qualcomm
- #6 Amazon
- #7 Tesla
- #8 Verizon
- #9 MediaTek
- #10 T-Mobile