5G Stocks for the next decade
Intro
Short article today on 5G and the potential opportunities arising.
What is 5G?
5G is the 5th generation mobile network, following after 1G, 2G, 3G and 4G/LTE. It is the next step improvement in the goal of a more ‘connected’ society and technology ecosystem.
I’m sure most readers here will have a fairly good idea of what 5G is in essence, though for the most part it just means faster download/upload speeds.
However, to get a little technical… Most of your current devices will be operating at some point on the radio frequency spectrum – typically somewhere up to 6Ghz. The more devices packed into this frequency band will mean slower connectivity and overall performance, as only so much data can be transmitted. Therefore, 5G’s proposal is to open up a section of unused ‘real-estate’ on the radio frequency spectrum to allow more devices.
This new part of the spectrum is called mmWaves, where 5G will probably operate somewhere in the range of 24GHz to 52GHz.
The problem with this is that mmWaves don’t pass through objects well. If there is a tree or house in the way, we would lose signal. So the solution is to build many ‘5G base stations’ which act as radio towers, allowing you to connect wherever you are.
Again, the problem with this is the cost. Building tonnes of these stations gets expensive.
There are other very clever aspects of 5G that make it unique to all its predecessors – however I’m not going to cover that here as I want to keep this fairly high-level.
What does is mean for consumers?
As it stands (5th Jan 2021) 5G really just means faster speeds on our mobile networks. However in the future, as 5G starts to get rolled out more widely, we will begin to see some benefits in several areas of our everyday technologies (or ‘soon to be’ every-day technologies).
Faster Devices
Our Smartphones are currently quite fast relative to 5 years back. However, there is so much room to improve. With 5G, we will be able to access a great deal more data with almost no latency ‘on the go’, which is not really possible with the current 4G infrastructure. For example, it will probably take you less than 20 seconds to download a series from Netflix for you to watch on the underground with 5G.
A more cohesive ‘Internet of Things’
The Internet of Things is a vague term encompassing most of the tech we use in our everyday lives. But it is basically just a collection of ‘smart devices’ that talk to each other via the internet. If the data transfer between devices is quicker and more robust it will allow for far more complex actions.
AR/VR developments
It might sound futuristic at the moment, but soon enough it is likely we will be wearing some sort of augmented reality headgear to help enhance our everyday life. 5G will enable the speed and volume of data transfer needed at low latency levels for this type of technology to work.
There will be plenty of other use cases for consumers that are currently not clear, but let’s wait and see how it all develops.
What does it mean for industry?
To be honest, it’s going to mean much of the same for industry as it does for the consumer – faster speeds, more data, better end products. However as we build the industries of the future (such as autonomous vehicles), we will see a huge benefit and a steep ramp in innovation which will lead to products and solutions I can’t possibly predict.
A 2017 study by Qualcom predicts that by 2035, 5G could underpin up to $12.3 Trillion worth of goods and services in industries such as retail, healthcare, education transportation, entertainment and more.
We’re just seeing the start of what is possible with 5G. I think there is so much opportunity to be had if you are willing to be patient.
Stock picks to benefit from 5G?
These are just some initial ideas, so I’m happy to hear any suggestions. And, obviously, each of these companies have more factors than just 5G impacting their success.
Semiconductors:
The increasing demand for advanced chips for use in all sorts of IOT devices will likely increase over the next 5 -10 years as 5G becomes more widespread. Below is a short list of companies I believe are poised to benefit from the planned upgrade in technology…
$QCOM – 5G ambitions far beyond just smartphones. Portfolio includes chips enabling 5G in everything from spartphones, to IoT, to cars. Dividend paying.
$AVGO – Broadcom, a developer and designer of semiconductor products. Clients such as Apple and Samsung. Dividend paying.
$NVDA – Exposed to sectors that are likely to be major beneficiaries of the shift to 5G which involve more complex games and higher levels of data. Acquisition of ARM. Dividend paying.
Transport
There’s several different angles you could look at this from. Though I strongly believe the autonomous driving industry will hugely benefit from the implementation of 5G as it will truly allow these cars to interact with one-another. Morgan Stanley predict that by 2050 autonomous vehicles will be producing 3,300 times more data, between 50 and 500 times more wireless usage, and up to 300 times more wireless data transmission. Therefore…
$GM – Weird one as General Motors are typically old-school when it comes to cars. Though they are investing heavily in AV. Owns a majority stake in cruise – a self-driving start-up.
$GOOG – Google owns Waymo, who are doing some really innovative things in the autonomous driving market. Plenty of other plays, however this one looks particularly interesting.
And some other Lidar companies (technology used in autonomous cars to scan the surroundings) look interesting, however I don’t know enough here to advise.
AR/VR/Gaming
An area I’m very familiar with. This is a technology perfectly poised to leap on all that 5G has to offer in the future. The growth in this industry has been somewhat stifled up to now due to the limits on how much data you can share and the speed which witch it can be transferred. Very excited for this one. Augmented reality incoming.
$FB – the Oculus division of Facebook has been growing over the past several years. I see a lot of opportunity here with 5G fully enabling the potential of VR/AR. The other business parts of Facebook look very strong too.
$U – A substantial amount of games are made on the Unity platform, this is set to increase rapidly over the next decade as gaming booms (my prediction).
*Just to note – these are some very high-level predictions for which 5G is not the only factor, so obviously some more DD is needed*
Conclusion
To conclude, 5G is an exciting technology perfectly poised to enable extreme innovation over the next 5-10 years.
It’s worth thinking about the various companies in the different sectors who are in a good position to benefit from these fundamental changes. My suggestions are just first thoughts, but more than happy to hear your suggestions.
Cheers,
Innovestor