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Blazingly Fast 5G Internet-of-Things Networks Coming Soon
February 07, 2019 - 5G Stocks To Invest In Span Chipmaker Xilinx, Corning, Keysight By Investors Business Daily
It's very early days in the build-out of 5G wireless networks. What 5G stocks will get an early boost? Look for management commentary on company earnings calls regarding 5G traction.
Some 5G stocks are already profiting as U.S. wireless firms like Verizon Communications (VZ) and AT&T (T) conduct field trials. Japan, South Korea and China are also forging ahead in 5G.
Xilinx makes programmable chips built into prototype network gear. Keysight Technology (KEYS) makes 5G network test gear.
Xilinx on Jan. 23 posted better-than-expected earnings and guidance as management commented on broadening 5G deployments beyond Korea and into China. Keysight stock's relative strength is 95 out of a possible 99, an all-time high.
Chipmakers Intel and Qualcomm, meanwhile, are involved in 5G trials. Both Intel (INTC) and Qualcomm (QCOM) made a 5G splash at the 2019 Consumer Electronics Show. They stand to gain in the longer run as 5G network deployment picks up.
Cristiano Amon, Qualcomm's president, said on its Jan. 30 earnings call with analysts that "we're very optimistic about how in fiscal 2020, how significant 5G will be for us."
5G is also a long-run opportunity for network gear makers Ericsson (ERIC) and Nokia (NOK). Nokia, on its Jan. 30 earnings call, downplayed 5G expectations for 2019.
5G networks will use high-frequency radio waves and advanced radio antennas. But there's more to 5G stocks than wireless infrastructure.
5G networks will connect to fiber-optic networks. That will provide reliability for emerging automotive, robotics and medical applications. Potential 5G stocks to buy include Corning (GLW), Ciena (CIEN) and other fiber-optic players. Crown Castle (CCI) has invested in cell-tower fiber network hookups.
Corning stock popped 10% in intraday trading on Jan. 29 after the company reported better-than-expected growth in its optical communications unit owing to the build-out of 5G wireless networks. Corning in April 2017 signed a deal with Verizon to supply $1 billion in optical fiber wiring.
In time, the breadth of 5G stocks will expand. The future of 5G lies in the Internet of Things, autonomous vehicles, remote health care and augmented reality phone apps.
5G Stocks, China And Politics
The Trump administration wants the U.S. to beat China in commercializing 5G services. That's bullish for 5G stocks. The administration is holding airwave auctions and aims to ease local regulations to speed up 5G deployment. The U.S. government is pressuring countries not to buy 5G gear from Huawei, China's biggest networking gear maker. That should benefit Ericsson, Cisco Systems (CSCO), Samsung and other network gear makers.
Verizon, AT&T Target 5G Wireless
Verizon and AT&T are taking different routes to 5G as a moneymaker. New York-based Verizon is testing 5G broadband services to homes. AT&T see a quicker return on business 5G services. Neither Verizon nor AT&T is expected to garner significant 5G revenue in 2019. If regulators approve the merger of T-Mobile US (TMUS) and Sprint (S), those two carriers are expected to make a bigger 5G push.
5G, Apple And Smartphones
Samsung at January's CES said it'll roll out a 5G smartphone in mid-2019. Apple (AAPL) isn't expected to make a 5G-ready iPhone until 2020. 5G mobile networks won't be available nationally until late 2020 anyway. 5G apps such as augmented reality could help improve Apple's iPhone sales. Once Apple takes the 5G plunge, chip suppliers to the iPhone maker will be among 5G stocks to watch.
Cable TV Companies And 5G Networks
If Verizon announces a big expansion of its 5G broadband services to homes, look for cable stocks like Comcast (CMCSA) and Charter Communications (CHTR) to take a hit. Even so, a significant threat may not materialize until late 2020, analysts say. And, cable firms are ramping up faster landline broadband with the help of Intel.
5G And Cloud Computing
Mini data centers in neighborhoods will link to cloud computing infrastructure. Nokia and Ericsson are developing 5G cloud gateways. With cloud software technology, pundits expect wireless firms to provide 5G connections for drones and smart manufacturing. Dell Technologies (DELL), Hewlett Packard Enterprise (HPE), Nokia and others aim to get on 5G-related edge computing.
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