The 5G megatrend has now gone live. Here’s how you invest in it
Imagine sitting in your living room, enjoying a fun conversation with your grandchild. You smile as the little one proudly holds up a new toy for you see.
Now, what if the reality is your grandchild was hundreds of miles away? What’s actually happening is you’re having a holographic phone call which enables the child to appear to be just a few feet away?
That technology is coming … and sooner than you may realize.
That’s because the 5G era has now officially begun …
Yesterday brought news that Verizon Communications has now gone live with its 5G mobile network for a small group of subscribers in Chicago and Minneapolis. Meanwhile, halfway across the globe, Korean mobile provider, SK Telecom also launched its own 5G network. It’s this 5G network that will support technologies such as the holographic phone call I just described.
Now, while you won’t be making that call tomorrow, it’s coming. The phrase “the future is now” has never been more appropriate as we enter this new era of technology.
In today’s Digest, let’s get everyone up to speed on 5G. And more importantly, let’s discuss the massive investment wealth this trend will be creating for years to come.
***Over the next decade, 5G will completely revolutionize the way we live
That’s no exaggeration.
To make sure we’re all on the same page as to why, I’m going to turn to Matt McCall, editor of Investment Opportunities, to help contextualize this opportunity. In Matt’s newsletter, he helps readers understand and profit from the major trends that are reshaping our world — and 5G is one of the most transformative trends you and I will experience.
Here’s what Matt wrote to his subscribers back in the fall:
The next-generation network will take speeds to levels that seem almost unimaginable.
Well, 5G will in theory increase the level of speed to match that of human reflexes, so we’re talking the blink of an eye, perhaps literally.
The current 4G network clocks in at around 100 megabits per second, which is extremely fast compared to 3G. But once 5G rolls out, that number jumps to 10,000 megabits per second — or 100 times faster than the current speed!
The big breakthrough will be the ability to connect a lot more devices that share large amounts of data in real-time.
As Matt points out, 5G’s ability to connect more devices and share more data in real-time is critical — in fact, that’s the real story. This is because all the major technological innovations of tomorrow — self-driving cars, the Internet of Things, virtual reality, the cloud, robotics, smart cities, artificial intelligence — require lightning fast, stable internet connectivity. Thanks to 5G, we’ll be able to connect cars, ships, homes, offices, and countless other items with software, sensors and the cloud.
But what does this really mean for you and me? Here are just a few examples of what 5G will enable:
· Remote surgery. Your doctor won’t even need to be in the same operating room as you.
· “Touchy” internet. You’ll experience tactile sensations (touch) — not just sight and sound.
· Automated self-driving cars. You’ve heard of this one. It’s coming sooner than you think.
· Holographic phone calls such as the one described earlier. It will appear as though your grandchild is sitting in the same room.
Get ready. All of this and far more is coming.
***As you might imagine, this technology is going to impact the flow of trillions of dollars
With 5G’s context behind us, let’s now turn toward the investing implications, starting with the broad financial impact of 5G.
From The Hill:
Here at home, when the entire 5G value chain is considered, some expect the benefits to top $3.5 trillion, support 22 million jobs, and contribute the equivalent of the entire economy of India to real American global GDP.
With speeds up to 100 times faster than 4G, lag-time lowered by a factor of five, mobile data volumes 1,000 times greater than today, and lower drain on batteries for remote cellular devices, 5G will enable new capabilities and unlock innovation across the economy.
So, the volume of wealth that’s going to be created by 5G is absolutely enormous. What then are the ways an investor could get involved?
Well, when you think of 5G, your mind probably jumps to the telecom companies that will offer the 5G service itself — think Verizon, Sprint, and AT&T.
But there are many other segments operating in the background which you could consider.
There are the owners of the 5G spectrum itself. “Spectrum” refers to the airwaves that carry the 5G communications signals. Then, there are the semiconductor companies that provide the chips used in our smart devices (think Qualcomm, Intel, and Skyworks). You could even invest in the companies that control the cell towers that will transmit the 5G signals. That’s just the beginning — there are many different avenues available to you.
***But one of the most interesting investment opportunities relates to 5G’s equipment vendors
I’m referring to Huawei, Nokia, and Ericsson.
You’ve likely seen these names in the news in recent months. As we reported here in the Digest, Huawei has been embroiled in a drama involving arrests, espionage allegations, and fear of Chinese 5G supremacy.
The Trump administration is concerned that the Chinese government could order Huawei (and other Chinese companies) to build “backdoors” into their equipment that would enable government officials to access sensitive data on the Huawei network for the purposes of spying or sabotage.
According to Bloomberg:
The Trump administration, convinced Huawei is a Trojan horse for Chinese intelligence, is determined to blunt its growing sales and influence.
The U.S. has been lobbying allies around the world to ban Huawei and the use of its equipment. In response, Huawei has gone on the offensive and stepped up the mud-slinging. In recent days, Huawei’s rotating Chairman Guo Ping said:
The U.S. government has a loser’s attitude. They want to smear Huawei because they can’t compete with us.
***While this drama is getting the headlines, Matt McCall has been pointing his subscribers toward one of Huawei’s competitors — Ericsson
Matt recommended Ericsson last October. Here’s his update to subscribers from his March issue of Investment Opportunities:
Ericsson (ERIC) has been in the news a lot over the last month, and I was pleased to see that almost all of the headlines were positive. That’s one reason why the stock climbed to its best level since April 2016.
The big news is still a little confusing, but over time it should be a solid boost to the company’s top line. I’m talking about the fact that the world’s largest telecom equipment company, Huawei, will be arraigned in the U.S. on March 14. The CFO and daughter of the company’s founder will be extradited.
Huawei’s legal issues expand beyond the U.S., and that’s creating an opportunity for Ericsson to pick up market share. Ericsson is currently #3 in global telecom equipment market share while Nokia is #2.
Ericsson is a compelling investment story because even without a boost from the Huawei situation it is adding new customers at a rapid pace. In fact, it has already announced 5G deals with 10 service providers and another 42 memorandums of understanding. In just the last two weeks, Ericsson has joined forces with U.S. Cellular, Telefonica, Inseego, and China Unicom.
The long-term outlook is strong …
If you’re interested in Ericsson, Matt suggests buying it under $9.25. At the time of this writing, it’s trading at $9.55, so keep your eyes open for a pullback if you’re looking to initiate a new position.
Ericsson isn’t the only company Matt has identified which could see major gains as 5G rolls out. If you’re interested in getting more from Matt on this trend, as well as the other stocks he’s recommending, click here.
***The next decade will be built on connectivity, and the 5G network that will bring it to us has now officially launched
As Verizon and other carriers continue to roll out 5G, we’ll keep you informed. We’ll also keep you up to speed on additional ways to play 5G.
In the meantime, we’re excited to see all the ways this transformative technology will begin to affect us on a personal level.
Have a good evening,