The fifth generation of communication technology, aka 5G, will play a critical role in shaping a fully connected world, putting several 5G stocks in the spotlight.
5G is set to take digital connectivity to new heights with greater bandwidths, speedy downloads and larger data capacity. The network will drive new technologies from IoT (Internet of Things) to AR/VR and the metaverse. Its impact will be felt across industries, from semiconductors to real estate.
Given the broad use cases, it is no surprise that the 5G sector is poised for massive growth. Data shows that the 5G market will grow from $98.3 billion in 2023 to a whopping $427.7 billion by 2028, reflecting a compound annual growth rate (CAGR) of 34.2%.
Needless to say, 5G is still very much in its early stages, and its adoption across industries could take years. However, companies actively involved in the expansion of 5G infrastructure will see significant revenue growth, while investors in 5G stocks can capitalize on the gains. On that note, here’s a look at three of the hottest 5G stocks on the market right now.
T-Mobile (TMUS)
T-Mobile (NASDAQ:TMUS) is the telecommunications giant leading the 5G revolution. In its efforts to expand its role in the 5G market, the company merged with Sprint in 2020. The strategic partnership helped T-Mobile double its total capacity and triple its 5G capacity. This was followed by the buyout of Mint, Ultra and Plum this year, which cemented its position in the industry.
According to Opensignal, T-Mobile holds the widest 5G reach on the market, giving it a competitive edge over its peers. The company has brought its 5G capabilities to the big stage, powering several high-profile events, including the MLB All-Star Weekend and Mubadala New York Sail Grand Prix.
Looking at the financials, it is no surprise that T-Mobile is at the top of its game. In its first quarter, the company reported a 4% growth in service revenue to $16.1 billion and 1.2 million net customer additions. Adjusted EBITDA grew 8% to $7.6 billion. The company is set to report Q2 earnings on July 31st and analysts anticipate a 22% growth in earnings and a 1.6% increase in service revenue YoY.
With shares up 25% in the past year, investors will find TMUS among the top 5G stocks to capitalize on the 5G gains.
Qualcomm (QCOM)
The opportunities for Qualcomm (NASDAQ:QCOM), a leader in the wireless technology space, remain endless as a 5G world takes shape. The company played a key role in adopting the 3G and 4G networks during the smartphone boom. Today, it’s taking an early lead in 5G with its mmWave mobile network and Snapdragon semiconductor products—the company’s chips power a range of technologies, from autonomous vehicles to gaming PCs.
Qualcomm’s financials reflect its success story. Despite modest revenue growth of 1% in Q1, net revenue surged by 37%. Shares rose 9.7% post-earnings. Qualcomm’s strong market position and strategic investments in 5G will power its future gains. Analysts anticipate double-digit revenue growth in its upcoming earnings, with JP Morgan giving QCOM stock a 34% price upside.
As a beneficiary of the 5G boom, Qualcomm is one of the hottest 5G stocks on the market right now. Shares are up 28% this year, but I anticipate a significant upside for QCOM in the coming years.
Broadcom (AVGO)
A third stock riding the 5G wave is Broadcom (NASDAQ:AVGO). The company made headlines recently for its 10-for-1 stock split, which investors typically applaud as making the stock more affordable. But while its stock may be trading at a lower price, AVGO sees plenty of upside ahead.
Broadcom marked its territory in the 5G market with several partnerships and acquisitions over the years. Last year, the company acquired VMware to accelerate its ability to increase connectivity across its 5G networks. This year, it inked a multi-billion dollar agreement with Apple (NASDAQ:AAPL) to develop 5G radio frequency components for the tech giant.
Coming to the financials, Broadcom reported better-than-expected earnings in Q2. Earnings per share (EPS) came in at $10.96 over the anticipated $10.84 per share. Revenue also beat expectations at $12.49 billion over the estimated $12.03 billion. Although AI remains a core driver behind the recent gains, 5G still contributes to a sizable portion of its revenue.
In the high-growth 5G services market, Broadcom looks increasingly unstoppable as it expands its position. Investors seeking a high-reward play will find AVGO one of the hottest 5G stocks today.
On the date of publication, Divya Premkumar did not have (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
