On October 13, Tim Cook, CEO of Apple (NASDAQ :), introduced iPhones with 5G support. The long-awaited event has sparked consumer interest in fifth generation (5G) wireless networks.
The big question for investors is which stocks will benefit if they are used both in the US and worldwide.
Today we'll take a closer look at the 5G revolution, as well as sectors and ETFs that could benefit from it:
The upcoming 5G revolution
One reason people are so excited about the 5G revolution: A wide variety of studies discuss how it will increase productivity. This is how chip giant Intel (NASDAQ 🙂 emphasizes:
“Each generation of wireless networks has reflected a significant increase in speed, and the benefits of 5G – the fifth generation of cellular network technology – will extend far beyond 4G LTE. Predicted speeds of up to 10 Gbps are up to 100x faster compared to 4G. "
UK-based telecom group Vodafone (NASDAQ 🙂 tells users:
"Lag and disconnects are a thing of the past, and super-fast, stable downloads, streaming and connectivity are now available wherever you have 5G coverage, even when you're in busy places."
5G will reduce the delay or latency of mobile applications, providing customers with high bandwidth and data capabilities. This is likely to support further technological developments in virtual reality / augmented reality (VR / AR), Internet-of-Things (IoT), healthcare and self-driving cars.
Swedish network company Ericsson (BS :), (NASDAQ 🙂 suggests that 5G will be the backbone of the infrastructure to develop smart cities.
Mobile phone providers that will offer 5G connectivity are attractive to investors because of their growth potential as approximately 77 million phones are expected to be upgraded in 2021 and likely to reach 1.5 billion by 2025.
] Industries and Stocks to Profit
We can expect Apple stocks to be at the center of that growth. Carriers and telecom companies, such as AT&T (NYSE 🙂 and Verizon Communications (NYSE :), or owners of 5G cell towers such as American Tower (NYSE :), also deserve attention.
stocks, including Qualcomm (NASDAQ :), are expected to lead the 5G revolution. After all, chips are indispensable in all such technological innovations.
Gaming stocks such as Activision Blizzard (NASDAQ 🙂 and NetEase (NASDAQ 🙂 will benefit from faster speeds in cloud gaming. 5G will allow games in the cloud to compete with console games as it will significantly improve graphics.
Internet and social media giants such as Amazon (NASDAQ :), Alphabet (NASDAQ :), Facebook (NASDAQ :), and Netflix (NASDAQ 🙂 also top the list of 5G beneficiaries.
Worldwide X Internet of Things ETF
Current Price: $ 27.77
52 Week Reach: $ 14.81 – $ 28.38
Dividend Yield: 0.67%
Expense Ratio: 0.68%
The Global X Internet of Things ETF (NASDAQ 🙂 provides exposure to companies targeting technologies such as IoT and 5G. IoT is still a growing field that refers to the development and use of connected devices. The fund started trading in 2016.
SNSR, which has 47 holdings, tracks the Indxx Global Internet of Things Thematic Index. The top 10 holdings make up more than 50% of SNSR's net assets, which amount to nearly $ 250 million.
Switzerland-based semiconductor technology group STMicroelectronics (NYSE :), California semiconductor company Skyworks Solutions (NASDAQ :), and Taiwan headquarters Advantech (TW 🙂 – a global name in intelligent IoT systems and embedded platforms – tops the list of businesses.
Nearly half of the companies in the fund are from the US, the rest are from Switzerland, Taiwan, Austria, the UK and France, among others. In terms of sector allocation, SNSR is heavily weighted by information technology (59%), followed by industry and services (28.5%) and consumer discretionary (6.7%).
Since the beginning of the year, SNSR is up 18% and hit an all-time high earlier in October. IoT and 5G overlap significantly as they both improve connectivity. Hence, the fund could act as a proxy in the 5G space.
Bottom Line
Analysts agree that 5G is a disruptive technology. It can connect anyone and anything anywhere. As a result, we can expect a wide range of stocks to rise in the coming quarters.
Understandably, US-based companies are not the only beneficiaries. For example, many companies in China, the world's most densely populated country and the world's second-largest economy after the US, are also likely to reap the benefits of 5G.
A regional ETF to investigate would be the Global X MSCI China Communication Services ETF (NYSE :). The fund, which started trading in 2009, currently has 37 holdings. Since the beginning of the year, the fund has gained nearly 10%, reaching a record high in July
.
Clearly, 5G will change many aspects of our lives. Therefore, we plan to revisit the topic in the coming weeks and discuss other funds and stocks.
