The 5G Stocks theme includes US-based infrastructure players, wireless carriers, test solution providers, semiconductor companies, and those who will benefit from the wireless industry’s ongoing transition to 5G. It has decreased by about 24% to date. Underperforming the S&P 500, which is down about 20% over the same period. Several factors have affected the topic. First, as the Federal Reserve raised interest rates at a more aggressive pace, high-tech stocks suffered. This can complicate a topic that few semiconductor companies have. In addition, semiconductor shortages and material cost inflation also affected the subject companies; However, this is likely to ease in the coming quarters. However, what is the outlook for the 5G space?
US carriers began rolling out 5G in earnest three years ago. However, there remains considerable room for growth in the technology for several reasons. While the initial deployment of 5G in the US focused on the high-band spectrum. Significant amounts of mid-band spectrum have recently become available to wireless operators, which is considered the sweet spot in terms of speed and coverage. In two auctions held in January last year and January 2022, carriers spent more than $100 billion on mid-band airwaves.
They will now need to double the infrastructure to accommodate the spectrum by renovating existing cell sites as well as installing new ones. Moreover, with 5G there are new players in the US and globally that are implementing networks from scratch without any cellular infrastructure. This can also lead to demand. Furthermore, businesses are also trying to create private 5G networks. It could also be a growing market for technology providers. There is more room for 5G spending growth on the handset side of the market as well. Smartphone creators are more provision low-end and mid-range machinery with 5G capabilities.
Skyworks’ parent stock was the fastest-growing company. The firm’s revenue has grown by nearly 52% in 1 year. Verizon appears to be one of the most reasonably valued stocks; the Price to sales multiple is only about 1x. Due to rising inflation and rising interest rates, Verizon is down 3% this year.
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