Fifth-generation wireless internet promises to change the world as we know it, enabling everything from self-driving cars to advances in quantum computing and artificial intelligence. That’s a huge opportunity for 5G stocks.
One area where 5G is expected to have a big impact is cloud computing. The 5G technology is expected to enable cloud service providers to reach mobile customers much more easily. Soon, people will be able to access the files and information stored in the cloud via their smartphones.
The wireless technology is also expected to facilitate machine-to-machine communications and enable faster and greater cloud storage capacity.
As 5G wireless and cloud computing converge, we look at four stocks that are leaders in these technology areas.
5G Stocks to Buy: Qualcomm (QCOM)
While it remains to be seen if 5G wireless will deliver all of its promised benefits, there’s no question that it will be the primary internet connection for people and businesses going forward. And wireless technology provider Qualcomm is one of the best companies to benefit from the 5G revolution that is now underway.
Specifically, Qualcomm is capitalizing on the use of its microchips in various 5G wireless technologies and platforms, notably 5G-enabled Android devices.
Investment bank Morgan Stanley has named Qualcomm one of the 10 5G stocks positioned to benefit from the growth of 5G wireless around the world.
Like other technology companies, Qualcomm’s stock has sold off in recent months. After peaking at $167.94 on Feb. 2, QCOM stock has declined 16%. However, the stock is up 82% in the last 12 months and analysts see further gains ahead.
The median price target on the stock is $170 a share, with a high estimate of $200.
Don’t give up on Salesforce. The San Francisco-based company’s stock has been beaten down this year, but the company remains the biggest cloud-based customer relationship management (CRM) software platform, with nearly a 20% share of the global market, according to IDC.
Salesforce is also heavily involved in cloud-based e-commerce, marketing and analytics services that are increasingly in demand among companies that are digitizing their operations – a process that has accelerated during the Covid-19 pandemic.
Salesforce is also integrating artificial intelligence into its cloud offerings. A proprietary service called “Einstein” processes massive amounts of data from Salesforce’s services and makes helpful forecasts for clients concerning their customer base and operations.
Despite its market leading position and innovative products, CRM stock can’t seem to catch a break this year. After peaking at $284.50 last September, the share price has come down 13%. Long-term investors should treat it as a buying opportunity.
5G Stocks to Buy: Palo Alto Networks (PANW)
Palo Alto Networks has reported its strongest financial results on the back of its growing cloud computing business. With a focus on securing cloud computing data, Palo Alto Networks’ business is booming.
For 2021, the company forecasts 17% annual growth. While the company has been around since 2005, it has orchestrated a renaissance for itself as cloud computing and cybersecurity have converged and grown exponentially.
Palo Alto has also been growing through deals, announcing last year the $265 million acquisition of The Crypsis Group, which provides digital forensics consulting and risk management services. And while PANW stock rose 84% in the past 12 months, it has continued to climb this year, up 12% since mid-March.
Despite the stock’s appreciation, analysts remain extremely bullish on this security. The median price target on the stock is $450, suggesting a potential 26% upside from here. The high target on the stock is $565.
Last but far from least is technology giant Microsoft. With a market capitalization approaching $2 trillion, Microsoft has been one of the few technology companies to see its shares continue to rise this year.
MSFT stock has risen 23% year-to-date and now trades at $260. The stock has stayed aloft due to its steady growth. And the main driver of the company’s growth today is its Azure cloud computing business. Azure is competing (and winning) against competitors such as Amazon (NASDAQ:AMZN) Web Services and Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Cloud service.
Microsoft’s cloud computing offering has grown more than 60% over the past year as the global pandemic increased demand for cloud storage and services. While other Microsoft business lines have also seen strong growth in the past year, including the Office and Microsoft Dynamics units, nothing has been a better performer than the Azure cloud computing platform.
Microsoft continues to innovate with Azure and tie it to the company’s other products to enhance the value for customers.
On the date of publication, Joel Baglole held long positions in CRM and MSFT. He did not have (either directly or indirectly) any other positions in the securities mentioned in this article.