The fifth generation of cellular technology, or 5G has fast-tracked the wide proliferation of video and other bandwidth-intensive applications with a data transmission rate that is about 10-100 times faster than the existing 4G networks. Billed as the technology of the future with faster download speed and low latency, 5G is touted to be the primary catalyst for next-generation IoT services. These include connected cars coupled with augmented reality and virtual reality platform, smart cities and connected devices that are likely to revolutionize key industry verticals.
As the 5G ecosystem evolves with increased deployment across the globe, it is likely to offer a plethora of opportunities for diverse industries to spearhead innovation in order to redefine our daily lives. Riding on such growth drivers, various firms are poised to benefit from the impending 5G wave in 2020. Below is a list of such potential winners in a random order.
Ericsson (ERIC - Free Report) : Backed by the relentless pursuit to develop 5G-enabled autonomous vehicles across the globe, Ericsson has secured more than 75 commercial 5G agreements with unique communication service providers, of which 24 are live networks. The company is increasingly focusing on 5G system development to capitalize on the upcoming market opportunities. The company believes that standardization of 5G is the cornerstone for digitization of industries and broadband. Moreover, Ericsson expects mainstream 4G offerings to give way to 5G technology in the future.
Moreover, as the Trump administration aims to thwart China-based telecom equipment manufacturers Huawei and ZTE from offering 5G gears in the United States, it is likely to create new business opportunities for the Sweden-based firm. The increased adoption of IoT devices is further expected to give more prominence to technologies like network slicing, thereby benefiting Ericsson. Notably, earnings estimates for this Zacks Rank #2 (Buy) stock have moved up 25.7% in the past 90 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nokia Corporation (NOK - Free Report) : This Finland-based telecom equipment manufacturer has secured more than 50 commercial 5G deals worldwide from diverse firms. Much of this healthy deal momentum can be attributed to the company’s solid foundation of mutual trust and confidence from the existing pool of customers that enabled seamless transition from 4G to 5G deployment. In addition, growing resentment about alleged attempts of data siphoning by Huawei has tilted the scales in favor of Nokia, despite the former’s low-price advantage. In particular, this Zacks Rank #3 (Hold) stock has witnessed strong customer interests from Nordic countries as European firms largely stood by President Trump’s univocal calls to stop using the Chinese telecom equipment on security concerns.
Nokia is well positioned for the ongoing technology cycle given the strength of its end-to-end portfolio. Its installed base of high-capacity AirScale product, which enables customers to quickly upgrade to 5G, is growing fast. The company is driving the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with the software and services to manage them. Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate and connect with each other. These include seamless transition to 5G technology, ultra-broadband access, IP and Software Defined Networking, cloud applications and IoT.
Qualcomm Incorporated (QCOM - Free Report) : With more than 150 5G design wins to date, Qualcomm is reportedly the only chipset vendor with 5G system level solutions spanning both sub-6, gigahertz and millimeter wave bands. The company is focusing to retain its leadership in 5G, chipset market and mobile connectivity with several technological achievements and innovative product launches.
Qualcomm is arguably the largest supplier of mobile phone chips in the world. The company has been primarily focusing on developing premium category Snapdragon 8 series chipsets that reportedly delivered speeds of up to 7 gigabits per second with a more powerful X55 5G modem. These chips are mostly found in high-end mobiles and smartphones, which put them beyond the reach of commoners. However, Qualcomm presently seeks to expand its product portfolio and develop mobile phone chips for the masses. The strategic move is intended to drive higher sales and achieve economies of scale through mass production. In particular, Qualcomm is mulling to add 5G capabilities to its cheaper chipset versions of Snapdragon 6 and 7 series. This Zacks Rank #1 stock is also betting big on 9150 C-V2X chipset that empowers automakers and roadside infrastructure providers with improved V2X capabilities for safety and autonomous driving.
T-Mobile US, Inc. (TMUS - Free Report) : Reportedly offering the fastest network in the United States in terms of both download and upload speeds, T-Mobile has become the first telecom carrier to activate nationwide 5G network, covering nearly 200 million Americans in more than 5,000 cities and towns. It boasts an investment of $30 billion for network improvements, 25,000 new towers and cell sites with network coverage of 1 million square miles. Covering 60% of the U.S. population, T-Mobile’s 5G coverage utilizes longer range low-band 600 MHz spectrum, offsetting the shortcomings of millimeter wave networks like limited range and poor obstacle penetration.
T-Mobile has received clearance from Department of Justice and FCC for its merger with Sprint. Markedly, the combination of the two networks would help to fill coverage gaps and provide enhanced 5G connectivity, leading the company to build new 5G infrastructure. The merged company would roll out 5G technology to 97% Americans, including 85% of rural locales. This Zacks Rank #3 stock is also offering two 5G-enabled smartphones — OnePlus 7T Pro 5G McLaren and Samsung Galaxy S10 5G — at no extra cost. The network will also be accessible to T-Mobile’s prepaid wireless carrier brand, Metro, marking the first prepaid 5G offering in the country. The company plans to introduce 15 new 5G-compatible phones in 2020 to spur innovation and deliver transformational 5G future.
Verizon Communications Inc. (VZ - Free Report) : Verizon has upped the ante against its rivals by launching the 5G Ultra Wideband network in select locations across 19 cities in the United States. As the company gears up to increase the tally of 5G Ultra Wideband mobility cities to 30 in 2019, it is offering an exclusive 5G moto mod by Motorola Solutions to power moto z3 – the world’s first 5G-enabled smartphone – to enable users to fully utilize the network features.
The 5G Ultra Wideband network hinges on three fundamental drivers to deliver the full potential of 5G technology. These include massive spectrum holdings, particularly in the millimeter wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy large numbers of small cells. Verizon has systematically invested in 5G technology to gain a foothold in the industry. This Zacks Rank #3 stock expects to capitalize on the impending 5G boom and outsmart competitive pressure.
AT&T Inc. (T - Free Report) : As the first carrier in the industry, AT&T has unveiled its 5G policy framework that will hinge on three pillars — mobile 5G, fixed wireless and edge computing. For a seamless transition among Wi-Fi, LTE and 5G services, AT&T intends to deploy a standards-based nationwide mobile 5G network in early 2020. Its 5G service entails utilization of millimeter wave spectrum for deployment in dense pockets while in suburban and rural areas, it intends to deploy 5G on mid- and low-band spectrum holdings. It believes that as the 5G ecosystem evolves, customers can experience significant enhancements in coverage, speeds and devices. This Zacks Rank #3 stock has already introduced 5G networks in 10 cities and is planning to add few more in the near future.
AT&T expects edge computing solutions to be widely available in autonomous vehicles, drones, robotic production lines and autonomous forklifts. Utilizing machine learning techniques and more connected devices, this could transform the way data-intensive images are transferred across the industry on real time basis.
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