5 Top 5G Stocks To Invest In For 2020

5 Top 5G Stocks To Invest In For 2020
Written by:
Michael Harris
28th January, 19:08
Updated: 19th May, 21:15
  • 5G network expected to be fully deployed in 2020, with the United States and China at the forefront of the revolution
  • Certain stocks have started gaining in 2019 in anticipation of 5G commercial deployment
  • Chipmakers and memory producers expected to benefit heavily

The fifth-generation networks (5G) are expected to be the next big thing. In addition to the expected increase of internet speed, the network will also host the IoT (Internet of Things) ecosystem that will host billions of connected devices. The 5G network is expected to deliver 10 times the data rates of 4G networks.

As a result, major telecom companies are preparing for a real uptake of 5G to happen in 2020. It was reported earlier that countries such as the United States, China, South Korea, and the United Kingdom have 5G available in some areas.

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Here, we outline 5 stocks that are expected to benefit from the deployment of the 5G technology this year. 

Applied Materials

Applied Materials, the California-based giant that produces semiconductor equipment, is expected to benefit heavily from the 5G deployment, due to the nature of its business. The company supplies semiconductor fabrication equipment to chipmakers. 

In November last year, Applied Materials released a forecast for the first quarter results, which were higher than those of market analysts. The main reason behind the upgraded forecast is the 5G rollout in key markets, as the company expects its clients to upgrade their equipment. 

“We’re optimistic about 2020, with an expectation of sustained strength in foundry, logic and a step-up in memory investments during the year,” said Chief Executive Officer Gary Dickerson. The company reported Q4 revenue increase of 2.5% of its semiconductor business.

Applied Materials stock price climbed more than 86% in 2019, as investors bet heavily on the rollout of the 5G network. 

Ericsson

The embattled Swedish tech giant sees the 5G network as a great opportunity to return to the path of success. Since the 90s and early 2000s, Ericsson has been struggling to cope with the cutthroat competition and the emergence of smartphones. 

However, the company was boosted by the ongoing war between the Trump administration and China’s Huawei and ZTE, which opens the road for Ericsson’s increased role in the North American market, one of the key markets for 5G. 

“Ericsson has done a great job with 5G. I think we’re far advanced, much further than people understand,” said the U.S. President Trump recently.

Not long ago, the company said that it recorded an increase in sales for its 5G-related products. However, CEO Borje Ekholm also forecasted higher costs associated with 5G.

“We expect that the initial challenging margins will shift to positive margins over the lifespan of the contracts,” he added.

In the meantime, the Swedish company has accelerated its plans for the rollout of 5G as it announced a new research and development site in France to focus on 5G software development and security.

This will provide access to a competence pool and foster industry and academic collaborations,” Ericsson said.

Nvidia

Nvidia is usually associated with gaming equipment, has evolved into a diversified tech giant that also produces solutions for the 5G network. The company’s latest product – Aerial –  is exactly looking to speed up the development of the 5G-related infrastructure. According to the company, Aerial is seen as “a critical element enabling 5G providers to move to cloud-native infrastructure”.

During last year’s Mobile World Congress in Los Angeles, Nvidia’s CEO Jensen Huang spoke about partnerships in this field.

“We’re working with Red Hat to build a cloud-native, massively scalable, high-performance GPU computing infrastructure for this new 5G world. Powered by the Nvidia EGX Edge Supercomputing Platform, a new wave of applications will emerge, just as with the smartphone revolution,” said Huang. 

Besides Red Hat, Nvidia has partnered with Microsoft and Eriksson to accelerate work on 5G-related products. 

Micron 

Similarly to Applied Materials, Micron stock price is expected to rise in 2020 on the back of increased demand for semiconductors. More precisely, Micron is an industry leader in DRAM (dynamic random-access memory), and NAND (flash memory used in smartphones) semiconductor markets.

“Our field work indicates DRAM fundamentals may improve earlier than expected on an improvement in server and smartphone demand. Coupled with MU’s improved cost position vs. peers, we see profitability scaling from here,” said Cowen research firm in a note after it raised the stock rating for Micron to Outperform from Market Perform.

In line with the rest of the tech industry, Micron stock price rose around 70% last year as investors placed their hopes on the recovery of the chip industry. Micron reported higher-than-expected results for the first fiscal quarter.

Qualcomm 

2020 is expected to be a big year for 5G and Qualcomm hopes that will be the case. However, Qualcomm is also making sure that its current customers – who are still focused on 4G technology – are happy. For this reason, the San Diego-based giant released new 4G-focused smartphone processors.

Despite the good connection and products for the 4G tech, analysts still expect 5G to become the main driving force behind Qualcomm’s business. 

“5G is good for Qualcomm. If you look at our company, we’ve been through a lot, in ’18 and ’19, but I think we made the right investments,” said Qualcomm president Cristiano Amon. 

Apple, which uses Qualcomm processors, said it expects to release its first 5G smartphone before the end of the year. This is one of the main reasons behind the rise in Qualcomm stock as it produces the chips and modems that powers 5G. 

“5G creates new excitement about the mobile segment, and it’s been a good thing for the company,” Amon added.

Summary

The much-anticipated 5G is expected to be fully launched this year. As the technology behind 5G produces internet speeds that are 10 times the current 4G, investors have been extremely focused on the tech stocks that produce materials and infrastructure to power 5G. 

We believe that Qualcomm, Nvidia, Micron, Applied Materials, and Eriksson, among others, are well-positioned to benefit from the upcoming 5G revolution. 

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