3 Best 5G Stocks to Buy Right Now

3 Best 5G Stocks to Buy Right Now
Written by:
Michael Harris
19th September, 20:18
Updated: 24th September, 00:46
  • The global 5G market is expected to achieve $414.50 billion by 2027
  • Ericsson is estimated to have secured over 100 5G contracts so far
  • Xilinx introduced a new tech solution for the 5G market that delivers greater 5G performance
  • Nvidia agreed to pay $40 billion and acquire the UK-based chipmaker Arm from SoftBank Group

Smartphone manufacturers, such as Apple, Samsung and Huawei among others, are already planning the rollout of new devices equipped with the latest 5G equipment. Telecoms are also investing billions in the infrastructure network to prepare for a surge in demand for 5G smartphones. 

Tremendous growth expected

The next-generation technology is seeking to provide faster communication than any other existing technologies currently used. Hence, it will offer huge potential for both the consumers as well as industry.

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“Key market players such as AT&T Inc.; China Telecommunications Corporation; and Verizon Communications are investing aggressively in rolling out 5G infrastructure to provide low-latency services for faster machine-to-machine (M2M) communication,” it is noted in a report published by Grand View Research

According to some latest forecasts, the worldwide 5G market could be worth over $40 billion this year only. This number is expected to rise rapidly on a year-to-year basis, expected to achieve $414.50 billion by 2027.

“The 5G wireless technology holds the potential to help in realizing remarkable transformations across all these verticals through reductions in overall costs and enhancement in productivity. Continued emphasis on improving energy monitoring and management as well as gaining better control of the energy generation and distribution network is also expected to boost the adoption of 5G services over the forecast period,” it is said in the report. 

Therefore, it is not surprising to see a high number of tech companies racing to benefit from the 5G rollout. On one hand side, the producers of telecom gear are working to cover as much ground as possible with the newest 5G equipment. 

“The 5G services market is currently in the introduction phase, therefore key service providers across the globe are aggressively investing in deploying modern network infrastructure to tap the maximum subscriber base in their region”.

Here are 3 stocks that are likely to benefit in the short-term from the emerging 5G trend

Ericsson

Ericsson (ETR: ERCB), the Sweden-based telecom giant, is estimated to have secured over 100 5G  contracts so far. Moreover, the company is expected to be a prime beneficiary of the China – U.S. war centered around Huawei. 

Ericsson made its intentions clear this week after it agreed to pay $1.1 billion for the US-based firm Cradlepoint. 

“The investment is key to Ericsson’s ongoing strategy of capturing market share in the rapidly expanding 5G Enterprise space. Cradlepoint complements Ericsson’s existing 5G Enterprise portfolio which includes Dedicated Networks and a global IoT platform,” Ericsson said in the statement. 

Shares of Ericsson trade at 105.00, around 9% off the all-time highs set in July this year. 

Xilinx

Xilinx (NASDAQ: XLNX) stock is another one on our radar as the company produces different 5G solutions. A few days ago, Xilinx introduced a new tech solution to the 5G market – the T1 platform. It delivers greater 5G performance, while at the same time spends less power and therefore cuts costs. 

“As 5G infrastructure investments continue to grow to support new and higher bandwidth services, providing solutions that can offer greater system acceleration to meet growing scale and bandwidth requirements is critical,” said Daryl Schoolar, practice leader for Fixed and Mobile Infrastructure, OMDIA.

Shares of Xilinx closed the week over 2% higher to close above the $100 handle. 

Nvidia

A few days ago, I wrote a piece on why investing in Nvidia stock may be a good idea. The tech giant agreed to pay $40 billion and acquire the UK-based chipmaker Arm from SoftBank Group. 

As one of the world’s largest producers of chips for smartphones, Arm is heavily investing in the 5G infrastructure. In essence, Arm is producing components to support new 5G devices.

“This combination makes financial sense, and it’s a great deal for SoftBank and us,” Nvidia CEO Jensen Huang said.

For instance, Arm’s equipment is used for the making of Qualcomm chipsets. The latter recently secured a major deal with Samsung to provide South Korean tech giant with the next-generation 5G equipment. 

Hence, Nvidia (NASDAQ: NVDA) stock is likely to benefit immensely from the Arm acquisition. The latest pullback in Nvidia stock price could be seen as an opportunity to get on the long side. 

Summary

The rollout of the new 5G Technology is expected to revolutionize communication worldwide. Billions and billions of dollars are invested by different market actors, as well as major states, to improve the telecom infrastructure and prepare it for the rollout of the next-generation devices. 

While numerous companies are well-positioned to benefit from the 5G trend, we have highlighted potential benefits that shares of Ericsson, Xilinx and Nvidia may experience in the near-term future. 

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