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5G stocks to watch

Published on: 05/10/2021 | Modified on: 12/06/2023

5G is the fifth generation of mobile networks and is expected to be the future of mobile technology. In this article, we analyse past performance and market analyst estimates to provide objective information that can help you make future trading decisions in the 5G revolution. Here are some of the top 5G companies and exchange-traded funds (ETFs) that you can speculate on using spread bets or CFDs in the stock market.

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5G: the next generation?

Wireless mobile technology has constantly been evolving over the past 40 years, as mobile networks improved and usage became more widespread. When the first cellular phones started to circulate in the 1980s, the technology was still in its infancy. The original connectivity networks that underpinned these phones were known retrospectively as 1G (first generation) and offered data speeds of 2.4 kilobits per second (kbps), enabling people for the first time to make wireless phone calls from anywhere there was sufficient signal.

Fast forward to 2022 and 5G is being rolled out with speeds of up to 1 gigabyte per second (Gbps) – 400,000 times faster than 1G and 100 times quicker even than 4G, promising instant data download, accelerating the reality of driverless cars, smart factories, and the virtual realities of the metaverse​.

It brings challenges too, including increased security risk and the question of how much power an integrated 5G global network will use. But one thing’s for certain — in the generation timeline of wireless technology, it’s the biggest leap yet.

Timeline of the technology

  • 1G arrived in the 1980s alongside the very first mobile phones. Mobile technology was not accessible to everyone, with a mobile phone costing around £3,000.

  • 2G was widely used in the 1990s. Users could send texts for the first time. Around this time, the public started to adopt mobile phones on a larger scale.

  • 3G was used mainly in the 2000s and was a major breakthrough. 3G is still in use today and compared to previous generations can transfer larger amounts of data, enabling video calls, file sharing and easy internet connectivity.

  • 4G was released in 2009. Far superior to 3G, 4G makes video calls, media streaming and internet access much faster and more accessible. It introduces the concept of interactive phone apps and the rise of the smartphone.

  • 5G was initially released in 2018 and more and more users are becoming connected. Many believe that 5G will revolutionise how we connect wirelessly. It's predicted that the speed of the 5G network will underpin trends such as IoT (internet of things), smart cities and big data.

  • 6G is in its very early stages of development, with mooted speeds of one terabyte per second — 1,000 times faster than 5G. However, the reality of such high speeds is still a nebulous concept and the possible benefits of 6G are so vast. Major telecommunication companies are exploring 6G, but it is not expected to come online before around 2035.

While the expansion of 5G is increasing rapidly, it's not expected to be globally available until 2025. Many companies are aiming to be at the forefront of this 5G revolution, capitalising from the widespread adoption of wireless technology.

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8 5G companies to watch

We review a selection of the best-performing 5G stocks that are directly related to the building and adoption of the network. The below information should be used as a guide to help determine which stocks you find interesting, and it’s important to then conduct your own research before trading.

Please remember that past performance is not a reliable indicator of future results.

Verizon is a telecommunications provider headquartered in New York. In 2021, Verizon chose Ericsson to help upgrade its core network in an $8.3bn deal to make it capable of managing 5G speed and communication upgrades. Verizon is hoping to drive its future profitability by the growth in its wireless technologies.

Verizon is one of the largest wireless communications service providers in the US, boasting a market share of around 30%, according to Statista. The company also offers the highest dividend on this list and its earnings report following the market crash of March 2020 demonstrated its strength and reliance to weather volatiles periods.

Over the past five years, the stock has continued to steadily climb but all that added value fell away throughout a difficult 2021. However, the stock may hold good potential for future growth based on the above information, especially considering the possible future utility of the 5G network.

Palo Alto Networks is a Californian cybersecurity firm that has long been a firewall market leader. In 2019, the company pioneered an extended detection and response (XDR) solution to help businesses prevent cyberattacks, which it has since expanded to cover 5G. The company has since introduced the industry’s first 5G-native security service, giving customers end-to-end network protection and confidence to use it for core business activities.

It believes 5G network slice security, which effectively allows service providers to extend a private connection to customers by virtually segregating traffic from the rest of the network, will drive service provider revenues in the long term. The company’s growth margins have remained robust during its diversification. Since the stock listed on the New York Stock Exchange at the end of 2020, shares have trended upwards but have dipped in early 2022.

Qualcomm is a technology company headquartered in San Diego, California. The company designs and creates software and semiconductor chips for use in wireless equipment like mobile phones. Qualcomm also develops and commercialises wireless technologies and has previously licensed many technologies related to 3G and 4G technology.

The growth in 5G technologies is expected to see more connected devices, which could result in higher income for Qualcomm due to growth in licensing sales, according to Forbes. Qualcomm reached an agreement with Apple in 2019 to supply its chipset in a multi-year deal, concreting the pivotal role the company could play in 5G technologies. As 5G goes beyond mobile phones, it presents a big opportunity for Qualcomm, as its chips enable communications in everything from IoT devices to autonomous cars.

Qualcomm is a profitable company and has paid a consistent dividend for years, even following the Covid-19 crisis. Qualcomm’s share price has also more than trebled over the past five years, rising 73% in 2020 and again at the start of 2022.

Ericsson is a telecommunications equipment and services company headquartered in Stockholm, Sweden. It offers services, software and infrastructure in information communication technologies and is one of the leading providers of 4G mobile network infrastructures. It's no surprise that Ericsson is heavily committed to the 5G revolution.

Ericsson provides hardware and services that help telecom providers with upgrading networks to accommodate the speed increases of 5G technology — it had signed 170 deals by February 2022. Additional to the agreements that Ericsson boasts, 109 of its networks are also live. In terms of 5G, Ericsson has a strong position, being the first company to deploy 5G networks across four continents, claiming that it supports the largest range of supported devices for 5G connections.

Ericsson is a profitable company and has paid a consistent dividend for years, which is shown on its annual financial reports. The company’s share price had almost doubled in the four years to mid-2021, although more than half of that gain was wiped out in the following six months. With its strong position and fundamentals, Ericsson has the chance to be at the forefront of the 5G revolution.

Qorvo is an American semi-conductor manufacturer formed in 2015 by the merger of TriQuint Semiconductor and RF Micro Devices. Since then, it has acquired Dutch chip manufacturer GreenPeak, Irish tech firm Decawave, and California-based human-machine interface pioneer NextInput and United Silicon Carbide.

The company is looking to expand its market share as 5G rolls out. One of the cheapest stocks in its field, Qorvo operates its own chip foundries, enabling it to navigate supply chain disruptions better than its bigger rivals. It is also a profitable company. Its share price trebled during 2020 and although it fell away a little in the second half of 2021, as the world began to reopen for business, it seems a likely beneficiary of the 5G revolution.

As the major tech firms – including Apple, Qorvo’s biggest customer – switch to design their own higher-value components such as modems and application processors, they will likely have less incentive to replace Qorvo’s chips, suggesting a future of growth for the company as the 5G demand accelerates.

Nokia is a telecommunications and consumer electronics company headquartered in Espoo, Finland. As of February 2022, the company has 214 commercial 5G technology deals and 74 live 5G operator networks, making it one of the leading players in the market.

According to Macrotrends, Nokia has reported total revenue increases of around 15% since 2020. While its stock price has fluctuated over the past five years, the coronavirus pandemic helped to boost Nokia’s fortunes off the back of improved margins for telecom equipment and software. The positive earnings saw its stock price recoup earlier losses, suggesting faith in Nokia’s 5G future.

Marvell’s semiconductors, data storage, network and security solutions have won it contracts to provide processors for 5G infrastructure with Nokia, Ericsson, Samsung and ZTE.

It has historical pedigree as well. Marvell supplied the chips for the first generation of Apple iPhones and the first mobile hotspot for the Audi A8 in 2010 — but is now also set to enjoy a multi-year tailwind. Its chips are critical in allowing data centres to increase bandwidth (reducing operating costs), deploy high-performance computing applications and maximise network storage. Demand for Marvell initiatives will not just be about products, but its capabilities for providing testing facilities as the world inches nearer to 5G.

Marvell is a profitable company, but growth is not its only attraction; since 2017, it has returned $1.8bn in dividends and buybacks. Its share price performance has seen tremendous growth since the start of 2020, suggesting high levels of confidence in its future.

As a leader in the development of real-time 3D content, Unity Software could be a major player in the rise of the metaverse. Its products, already used for mobile gaming and filmmaking, could play an integral part of augmented and virtual reality devices.

Unity, which publicly listed on the Nasdaq in September 2020, has a leading share of the mobile gaming market. The company’s revenues are well diversified across North America, Asia-Pacific, Europe, the Middle East and Africa. Unity’s stock price performance has been volatile since its IPO — it halved in value in the first half of 2021 and has been consistently volatile in early 2022. However, Unity is a profitable company with the CEO targeting a 30% consistent revenue growth over the next decade.

Please note that past performance is not a reliable indicator of future results.

Related products

Pricing is indicative. Past performance is not a reliable indicator of future results. Client sentiment is provided by CMC Markets for general information only, is historical in nature and is not intended to provide any form of trading or investment advice - it must not form the basis of your trading or investment decisions.

How to trade on 5G stocks

  1. Research the 5G industry. Learn about its history, such as which companies are the key players and where the latest developments are happening (not just in tech components, such as semiconductors, but geographical trends too, such as where manufacturing sites are being built). 5G is expected to impact various sectors from healthcare and agriculture to travel and finance, making its reach broad.
  2. Compile a stock watchlist​. You could keep an eye on stock performance, earnings reports and any media stories or announcements. Look into potential headwinds and assess your choices objectively and analytically.
  3. Decide on a trading strategy. Do you want to actively speculate on share price movements with spread bets or CFDs? Alternatively, a common way to get exposure to a variety of stocks related to an industry is with an ETF (exchange-traded fund) or share basket, which is a personalised CFD basket of stocks belonging to the same sector or theme.
  4. Practise using a demo account. Trading in a simulated market environment can give you a feel for how the financial market works before you take the plunge.
  5. Regularly review performance. 5G is a fast-moving environment and you might need to be sharp to react to any unexpected turns or innovative game-changing technology (trading on news​). That doesn’t mean making impulsive decisions but keeping an eye on trends that could quickly affect returns.

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What else do you need to know before trading?

Trading on the financial markets can be a daunting process, especially for a beginner, so it may be a good idea to brush up your knowledge on the following things beforehand:

  • Costs​ (including spreads, margin rates, overnight fees, commissions)

  • The risk that your chosen market or instrument presents

  • How trading with leverage works​ (also known as trading on margin)

  • How to prevent margin calls and account close-outs

  • Risk-management tools​​, indicators and market data that can help with every trade

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Are there any 5G ETFs?

There are multiple exchange-traded funds that track and provide exposure to 5G-related companies, including those focusing on components and infrastructure to highlighting companies and industries that will benefit from 5G communication. Below are some of the most popular 5G ETFs among traders.

Since launching in 2004, this fund has grown to have more than $3bn in assets under management (AUM), making it one of the largest ETFs to offer exposure to the communication services sector. It tracks the performance of an index of communication services and applications listed in the US, including stocks that offer telephone, data-transmission, cellular and wireless communication services. Top-weighted holdings include Verizon, AT&T, Comcast, and Activation Blizzard.

This ETF invests in companies that span multiple segments that are enabled by technologies such as Wi-Fi, 5G telecommunications infrastructure, and fibre optics. This includes the development of semiconductors, integrated solutions, sensors, smart grids, and connected cars. It has holdings such as STMicroelectronics, Skyworks Solutions, ADT Inc, and Silicon Laboratories.

Created in 2011, this fund focuses on companies that devote resources to both 5G and digital cellular technologies as and when they emerge, including 5G Infrastructure & Hardware The fund is diverse, consisting of REITs, equipment manufacturers, general software companies, and mobile phone manufacturers. Top-weighted holdings include Advanced Micro Devices, HP, and IBM.

Gain exposure to 5G through our share basket

Our 5G share basket is a collection of over 20 stocks related to 5G technologies. This product helps to spread the risk across multiple 5G companies, which makes it a popular buy-and-hold strategy. Our share baskets also come with zero commission fees and lower holding costs than when you trade on individual shares (other costs may apply).

Learn more about our 5G Share Basket​, including trading hours, margin rates, and holding weightings.

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What’s the best way to invest in 5G?

To gain exposure to the trending 5G industry, there are several ways you can get involved. With CMC Markets, you can spread bet or trade CFDs on individual shares, exchange-traded funds (ETFs), or our very own 5G share basket, which is a portfolio of multiple stock CFDs revolving around the 5G theme.

Who has the largest 5G network?

In the US, 5G coverage is dominated by three companies. As of 2022, T-Mobile covers 53.8% of the country, AT&T covers 29.5% and Verizon covers 12.7%, according to WhistleOut. You can spread bet or trade CFDs on these shares individually (including T-Mobile’s parent company, Deutsche Telekom) by opening an account with us.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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