Investors seeking exposure to telecom stocks can consider focusing on individual companies that are actively involved in 5G infrastructure.
Following the initial investor hype around the rollout of 5G technology, the difficult macroeconomic conditions facilitated a lower interest in this next-gen technology. This sentiment reinforces comments from telecom executives. They have noted a more significant slowdown in US operator spending on 5G networks than initially anticipated.
As the macroeconomic conditions improve, investors are likely to allocate more cash in 2024 towards next-gen technologies like 5G. As the technology becomes more widespread, companies at the forefront of 5G development are likely to experience substantial growth.
Ericsson (ERIC)
Ericsson (NASDAQ:ERIC) is a Swedish multinational networking and telecommunications company. The company is considered a major player in providing communication technology and services, Ericsson specializes in 5G infrastructure, mobile networks, and IoT solutions.
A few months ago, ERIC stock hit a 6-year low after the management said it anticipates continued uncertainty affecting its mobile networks business until 2024. Ericsson also posted a drop in third-quarter revenue due to decreased demand for 5G equipment in North America.
However, the situation improved dramatically for the company after AT&T (NYSE:T) announced it selected Ericsson to lead the commercial scale open radio access network deployment. The contract is worth as much as $14 billion over the next 5 years.
With AT&T’s contract, Ericsson is now much better positioned to attract new customers. Coupled with an attractive valuation, Ericsson is likely to be considered by long-term investors as one the solid telecom stocks to own.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is a leading semiconductor and telecommunications company, renowned for its innovation in 5G technology. As a key player in the 5G sector, Qualcomm designs next-gen 5G products, including advanced chipsets and modems. These components empower a wide range of devices, contributing to the global rollout and optimization of high-speed, low-latency 5G networks.
Back in September, Qualcomm said it inked a 3-year deal with Apple (NASDAQ:AAPL) to provide 5G systems for Apple’s smartphones through 2026. The agreement emphasizes its pivotal role in shaping the evolution of mobile communication technology.
Last month, Qualcomm said it generated revenue of $8.67 billion in its fourth fiscal quarter. Handset chip sales fell 27% to $5.46 billion but above the Street expectations. Sales in the Qualcomm’s QCT segment, which sells processors, slumped 26%.
This positive trend in Qualcomm, a leading figure in the telecom sector, underscores its status as one of the top telecom stocks for potential investors.
Deutsche Telekom (DTE)
Deutsche Telekom (ETR:DTE) is a global telecommunications giant, which is actively deploying and expanding its 5G network infrastructure. According to recent reports, the telecom services provider runs a 5G network that covers 96% of the German population.
Moreover, Deutsche Telekom’s 5G network boasts 80,000 antennas across 800 cities in Germany. The company aims to cover 99% of the population with 5G by 2025.
DT initiated a collaboration with Nokia (NYSE:NOK) and Fujitsu (OTC:FJTSF) in December, with plans to have 3,000 O-RAN compatible antennas by the end of 2026. Earlier this year, Deutsche Telekom said it operates fiber optic connections that account for around 40% of all 5G mobile radio systems.
On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
