Our indicative theme of 5G Stocks – which includes U.S.-based companies that stand to benefit from the ongoing transition of the wireless industry to 5G – is up by about 8% year-to-date, compared to the S&P 500 which is up by about 9% over the same period. The theme has outperformed since the end of 2019, rising by about 45%, compared to the S&P 500 which is up by about 27% over the same period. So what’s the outlook like for the theme?
While longer-term demand for 5G products is likely to be robust, with carriers doubling down on 5G spectrum and smartphone makers pushing lower-priced 5G handsets, there could be some near-term headwinds for the industry due to the global shortage of semiconductors. Although the automotive industry has borne the brunt of the shortage thus far, the issue appears to be spilling over to the telecom space as well, given that semiconductors are at the heart of smartphones and wireless networking products.
The shortage is having a mixed impact on the various companies in our theme. Skyworks Solutions has been the strongest performer, rising by about 24% year-to-date, considering that the company operates some of its own fabs, reducing its exposure to the current supply crunch. Qorvo stock has also fared well, rising by about 16% year-to-date, as the company also operates its own foundries which should give it adequate supply, while potentially benefiting from higher pricing. On the other hand, modem supplier Qualcomm, which is a fabless semiconductor company that depends on third parties to produce its chips, has been the worst performer as it struggles to keep up with demand. The stock has declined by about 8% this year.
[3/4/2021] Will 5G Stocks Benefit From Spectrum Auctions?
Our indicative theme of 5G Stocks – which includes U.S.-based companies that stand to benefit from the ongoing transition of the wireless industry to 5G – is down by about -1.6% year-to-date, compared to the S&P 500 which is up by about 2% over the same period. However, the theme has outperformed since the end of 2019, rising by about 32%, compared to the S&P 500 which is up by about 19%. Within our theme, Skyworks Solutions has been the strongest performer, rising by about 15% year-to-date. On the other side, Qualcomm has fared the worst, declining by about -14%. Here’s a rundown of some of the recent developments in the 5G space, and how could they impact the stocks in our theme.
Smartphone sales rebounded in Q4 2020, rising by about 4.3% year-over-year per IDC, after seeing a decline in the earlier part of 2020, indicating that 2021 could be a stronger year for the smartphone market.  Moreover, premium vendor Apple
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[2/2/2021] 5G Will Come Of Age In 2021. Which 5G Stocks Should You Pick?
5G wireless technology is likely to see more widespread adoption through 2021, as Apple scales up production of its 5G equipped iPhone 12, with other players like Samsung launching more mass-market versions of their 5G smartphones. Wireless carriers are also likely to invest in improving 5G coverage, particularly for the faster version of the technology called mmWave, which is largely restricted to urban areas at the moment. The growing adoption of 5G is likely to help a range of companies including semiconductor companies, tower infrastructure companies, testing equipment manufacturers, and wireless carriers. Our indicative theme of 5G Stocks – which includes U.S.-based companies that stand to benefit from 5G upgrades – is up by about 8% year-to-date, compared to a 0.6% gain for the S&P 500. Skyworks Solutions – a radio frequency chip provider – has been the strongest performer in our theme, rising by about 20% year-to-date, driven by strong quarterly results and soaring demand from Apple, its largest customer. On the other hand, U.S. wireless behemoth Verizon has been the worst performer, declining by about -8% year-to-date, as its subscriber and revenue growth over the most recent quarter fell below street estimates.
[Updated 11/25/2021] 5G Stocks Benefit From iPhone 12 Tailwinds
5G has emerged as a hot investment theme this year. While major U.S. carriers have been upgrading to the next-gen technology for over a year now, consumer adoption is also likely to pick up meaningfully as Apple has embraced the technology relatively early in the cycle, equipping its entire flagship iPhone 12 line-up with 5G radios. Carriers are also heavily promoting 5G devices, with the new iPhones effectively available for free for subscribers with trade-ins and some other commitments. As 5G adoption grows, it should have a positive impact on demand across a wide range of companies, ranging from semiconductor players, tower infrastructure companies, testing equipment manufacturers, and wireless carriers. Moreover, 5G technology is likely to find much broader applications beyond smartphones, potentially in areas such as industrial automation, driverless cars, healthcare, and smart cities. Our indicative theme of 5G Stocks – which includes U.S. listed companies that stand to benefit from 5G upgrades – is up by 27% year-to-date, compared to an 11% gain for the S&P 500. Qualcomm was the biggest driver of the theme’s return, as it rallied by 68% year-to-date. On the other side, Verizon stock is down by about 2% year-to-date.
[Updated 10/7/2020] Verizon, Qualcomm, Qorvo: Stocks To Watch As Apple Preps 5G iPhones
Our indicative theme of 5G stocks – which includes semiconductor players, tower infrastructure companies, testing equipment providers, and wireless carriers that stand to gain from the next-generation networks – is up by about 19% year-to-date, versus 5.5% for the S&P 500 as of 10/7/2020. While 5G wireless networks are being rolled out in the U.S. and other developed markets, mainstream adoption of the technology is likely to gather pace as Apple – one of the largest and most iconic smartphone vendors – is set to unveil its first set of 5G handsets next week. Below, we provide a bit more about some of the companies in our theme, how the 5G upgrade cycle could benefit them, and how they have fared thus far in 2020.
Qualcomm, one of the largest modem and mobile processor vendors, is seen as a leader in 5G wireless technology. The company could see sales pick up as smartphone behemoth Apple is widely expected to use Qualcomm’s modems in its new iPhones. The stock is up 38% year-to-date.
Skyworks Solutions sells analog semiconductors that include power amplifiers, front-end modules, and radio frequency products that go into mobile and wireless devices as well as wireless infrastructure equipment. The company counts Apple as one of its biggest customers. The stock is up 23% this year.
Qorvo, Inc. also supplies RF components to smartphone players such as Apple, as well as to the infrastructure, and defense space. The stock is up 13% this year. (See our analysis Is Skyworks A Better Bet Than Qorvo?)
American Tower Corp, the largest U.S.-based tower leasing company, is structured as a real estate investment trust. Tower companies stand to gain from 5G considering that antennas and other equipment for 5G are heavier and larger, meaning that rentals could also be higher. The stock is up about 6% year-to-date.
Verizon , one of the largest U.S. wireless carriers, stands to benefit from 5G related subscriber additions and potentially improved pricing for 5G plans. The stock has remained roughly flat year-to-date.
Keysight Technologiesprovides electronics test and measurement equipment and software targeted at the wireless sector. Keysight should benefit as the 5G rollout gathers speed globally, as equipment and chip manufacturers who want to design and develop 5G products likely require its testing and measuring solutions. The stock is down 3% year-to-date.
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