This 5G stock could gain 35% in the coming weeks

on May 6, 2020
Updated: Feb 27, 2024
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  • Samsung chooses Xilinx’s chips for worldwide 5G commercial deployment
  • Xilinx stock price trades around 30% higher compared to the March lows
  • An inverse head and shoulders pattern is in the development, which can translate into further 35% gains

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The tech sector is leading a stock market rebound after the multi-year lows were printed in March amid the COVID-19 market selloff. Investors have placed additional focus on 5G stocks to buy given the expected massive rollout of the fifth-generation network in the second half of the year.

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Invezz listed five stocks that are likely to benefit from the 5G revolution given that the projected number of 5G connections is expected to grow from roughly 10.0 million in 2019 to 1.01 billion in 2023.

Xilinx (NASDAQ: XLNX) is another stock that looks extremely well-positioned to get a boost as network deployment gains traction. The company makes programmable chips built into prototype 5G network gear.

“5G is likely to be a multiyear secular driver broadly across the semiconductor universe,” Raymond James analyst Simon Leopold said in his note to clients.

Governments around the world, led by the United States and China, have already committed tens of billions of dollars to 5G infrastructure building. In addition, tech giants are also initiating privately-funded infrastructure projects.

China Mobile, for instance, awarded contracts worth $5.2 billion to acquire 232,000 5G base stations. In a similar fashion, Xilinx has been chosen by Samsung for worldwide 5G commercial deployments. In a major win for the tech giant, Samsung decided to use Xilinx’s Versal adaptive compute acceleration platform (ACAP).

“Samsung has been working closely with Xilinx, paving the way for enhancing our 5G technical leadership and opening up a new era in 5G,” said Jaeho Jeon, executive vice president and head of R&D, Networks business, at Samsung Electronics.

“Taking a step further by applying Xilinx’s new advanced platform to our solutions, we expect to increase 5G performance and accelerate our leadership position in the global market.”

Xilinx said that its Versal ACAP devices will be generally available before the end of the year, while the early-access customers have already started receiving first devices.

Technical analysis: Inverse head and shoulders pattern in the making

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Xilinx stock price has gained more than 30% since mid-March when the price hit a 20-month low below the $70 mark. Shares of Xilinx have traded in an uptrend since, which is now taking a form of the inverse head and shoulders pattern.

Xilinx stock daily chart (TradingView)

This chart pattern is considered to be a bullish reversal formation. It is activated once the neckline is broken (the middle blue horizontal line). Thus, the Xilinx stock price moving above the $92 mark would trigger the inverse head and shoulders pattern, while a trip to $116 would complete the formation.

If this is the case, a move to $116 would translate into the gains of around 35% for the Xilinx stock price.

Summary

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Shares of Xilinx look very well positioned to make significant gains in the coming weeks and months after the company won a major contract to supply Samsung with its 5G chips. Moreover, the stock price is building a powerful bullish pattern that may result in a move to $116.

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