Over the past several years, one of the biggest tech stories has been 5G. The next-gen cellular networks began to roll out in late 2018 amid a storm of hype. Smartphones rushed to incorporate 5G and carriers battled over who had the first and fastest 5G networks. The technology was promoted as being critical to autonomous car operation and touted as a possible replacement for broadband home internet service. There was a rush to invest in 5G stocks.
As 2022 approaches, we’re now well into the 5G era. It’s tough to find a new smartphone that doesn’t have 5G capability. Most urban areas have wide coverage — although it’s the less impressive low-band 5G that’s a relatively modest bump over 4G LTE speeds. At this point, there are some clear winners and losers when it comes to the technology.
From an investment perspective, the tech developers are doing well, but the carriers who are spending big to deploy 5G service are taking it on the chin. You’ll see that trend in full effect among these seven 5G stocks:
- Advanced Micro Devices (NASDAQ:AMD)
- Arista Networks Inc (NYSE:ANET)
- AT&T (NYSE:T)
- Broadcom (NASDAQ:AVGO)
- Nvidia (NASDAQ:NVDA)
- T-Mobile (NASDAQ:TMUS)
- Verizon (NYSE:VZ)
You can still do quite well by adding 5G stocks to your portfolio. The key is being selective and not going with just any company that’s promoting its involvement with the technology.
5G Stocks: Advanced Micro Devices (AMD)
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When it comes to AMD, investors are probably thinking Ryzen computer processors and Radeon graphics cards. Both are highly successful lines of business. Those Ryzen processors in particular have been shaking up the PC world status quo for the past several years.
What many people don’t realize is that AMD is also involved in 5G networking. The focus here has been on the infrastructure side, particularly servers powered by AMD’s Epyc processors. AMD has been positioning these as being ideal for 5G applications, with integrated security, a high degree of scalability, higher performance and power efficiency. In addition, last year, the company made a big move, announcing a $35 billion deal to acquire Xilinx.
That company is a leader in the field of programmable gate array chips (FPGAs), which are used in data centers and networking applications. Ideal for 5G installations.
AMD stock is a high performer among 5G stocks. After a stellar 2020, AMD shares have delivered a 56% return so far in 2021. At the time of publication, AMD Stock earned a “B” rating in Portfolio Grader.
Arista Networks (ANET)
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California-based Arista Networks is focused on networking and network switches. It has been a part of the 5G story since the next-gen cellular networks first began to roll out. For example, in 2019, South Korea’s SK Telecom chose Arista’s 5G-optimized network switches as it rolled out its new network infrastructure.
In a press release SK Telecom’s representative said: “By installing Arista Networks’ network switches optimized for 5G in our infrastructure, we have been able to provide high-quality 5G services quickly and reliably to our customers.”
Over the past 5 years, ANET stock has delivered growth of 431%, proving that 5G stocks can be performers. The current Portfolio Grader rating for ANET stock is a “B.”
5G Stocks: AT&T (T)
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America’s third-largest mobile carrier is a cautionary tale about investing in 5G stocks.
After being busted for its 2017 “5G Evolution” network — which was just rebranded 4G LTE — AT&T launched its actual 5G network rollout in at the end of 2018. The transition to 5G is beginning to pay off for the company. In October, it reported adding 928,000 net new phone subscribers in the third quarter. That was far more than the 560,000 that had been projected.
However, new subscribers attracted by AT&T’s 5G network have come at a huge cost, and that’s hurting T stock.
Carriers don’t just have to pay for new switches, networking hardware and towers, the race is also on to snap up spectrum to support 5G. In January, AT&T was hunting for a $14 billion loan to buy additional 5G spectrum. In total, the company’s debt has piled up to the tune of $179.2 billion, with a sizeable chunk of that being spent on 5G rollout. It’s going to take a long time for revenue from new mobile subscribers to pay down that debt.
AT&T shares have performed poorly through the early 5G era, with T stock down 42% over the past 5 years. Check Portfolio Grader and you’ll see that T stock is struggling, with a “D” rating.
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I can think of few other 5G stocks that are better-positioned to take advantage of the technology than Broadcom.
This is a company that is a big player in both the commercial and consumer aspects of 5G. On the commercial side, Broadcom sells key products like 5G-capable switches and base stations. On the consumer side, Broadcom chips are found in many 5G smartphone modems. As consumers upgrade to new phones to take advantage of 5G capability, Broadcom is also selling more Wi-Fi, GPS, Bluetooth and other wireless chips to smartphone makers.
In its Q3 earnings, Broadcom reported record quarterly revenue, pointing to 5G as one of the key areas driving growth. So far in 2021, AVGO stock has delivered a 38% gain. Broadcom currently rates a solid “B” in Portfolio Grader.
5G Stocks: Nvidia (NVDA)
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Nvidia is another of those huge technology companies that you may not realize is operating in the 5G space. Nvidia’s AI on 5G platform offers high bandwidth, low latency network infrastructure.
It’s becoming a player in enterprise 5G networks where customers are able to deploy powerful AI applications over an ultra-fast, private 5G wireless network. Nvidia has also announced partnerships with leading cloud service providers to deploy AI on 5G for projects, including smart cities, hospitals and self-checkout retail locations.
Another aspect of Nvidia’s 5G operations is its GeForce NOW cloud gaming service. It’s being used as leverage for 5G adoption, since gaming relies on high speed, low latency networking.
Among 5G stocks, Nvidia is another example of the companies behind the technology performing better than the companies deploying it. Even after sliding from its late November all-time high close, NVDA stock has still been a growth monster in 2021, up 142% so far this year.
The current rating in Portfolio Grader for NVDA stock is “B.”
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When T-Mobile merged with Sprint last year, it leapfrogged AT&T to become the nation’s second-largest mobile carrier. After spending another $3 billion on 5G spectrum T-Mobile was quick to make the case for its infrastructure investments paying off: “We’re already miles ahead in executing on our clear and consistent plan, building the fastest, biggest and most available 5G network with the perfect mix of spectrum. That is going to continue to translate into a significant and demonstrable advantage for years to come.“
T-Mobile does have some 5G-related positives going for it that may yet pay off. In particular, among the major carriers, T-Mobile has bragging rights for its 5G network living up to speed claims. In independent testing, it was confirmed that T-Mobile had the fastest 5G network in the country. Its average throughput speed of 95 Mbps was nearly 70% faster than AT&T’s.
While TMUS stock has delivered a respectable 102% return over the past 5 years — much of that in the aftermath of its blockbuster Sprint merger — 2021 has been disappointing. At this point, shares are down 13% since the start of the year.
At the time of publication, TMUS stock was rated as a “D” in Portfolio Grader.
5G Stocks: Verizon (VZ)
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Finally, we have Verizon, the nation’s largest cellular carrier. This is a company that is all-in on 5G deployment. It has gone beyond cellular service for smartphones to offer 5G home internet service, which replaces cable broadband. In a familiar story, the 5G bet has been expensive. In March, Verizon said it had spent $52.9 billion on 5G spectrum auctions. That’s spectrum only, not network upgrade and rollout costs.
Despite the expenditures, Verizon’s 5G network is falling behind T-Mobile’s in both coverage and speeds. That’s making it a tough sell for consumers looking to make the most of their 5G smartphones. Verizon is counting on that home 5G internet service to be a big winner when the dust settles, but investors aren’t sold on its prospects at this point. At its current value, VZ stock is almost exactly where it was 5 years ago, to the penny. It’s not exactly a high-flying 5G stock.
VZ stock currently earns a “D” rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in AMD, AVGO, NVDA and TMUS. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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