The year 2023 was not great for telecom companies or their hardware providers. After heavy spending in 2021 and 2022, many firms dialed back investments this year. On the consumer side, sales of smartphones dipped after last year’s record pace. Despite the dip, several 5G stocks have risen up and gained a ton of value.
This momentary lull represents an opportunity. It’s no secret that more and more of the world’s work, learning, and commerce is taking place online. That’s especially true in many fast-growing emerging markets. These three 5G stocks are set to cash in as that shift continues.
Qualcomm (QCOM)
What’s beyond 5G? Naturally, that would be 6G. This leads us to Qualcomm (NASDAQ:QCOM), which is the long-running innovator in this space.
Indeed, the communications-focused chip giant built its fortune from developing and licensing out the technology behind 3G and 4G to telecom companies and smartphone makers. Qualcomm is at the forefront of 5G technology today, along with its other businesses that it has developed such as its Snapdragon computing platform.
While most people are still focused on rolling out 5G, Qualcomm is already hard at work on 6G. It released a lengthy presentation highlighting the path to 6G deployment by 2030.
Qualcomm isn’t just about faster cell phone communications, though. The company is also a leader in developing AI-enabled chips for mobile applications. This should, over time, allow developers to harness the power of AI for phones, connected cars, and other such devices.
Corning (GLW)
There is a conception that 5G works entirely through the air. But, on the contrary, data still travels through fiber-optic cables before getting to a tower for last-mile distribution via 5G to the end user. In other words, to have more mobile data and 5G penetration, the world needs a lot more fiber-optics.
Specialty glass and ceramics maker Corning (NYSE:GLW) is set to reap much of the benefits from this demand. And it’s not just that legacy business, either.
Corning has leaned into the 5G market opportunity with its SpiderCloud small cell Enterprise Radio Access Network (E-RAN). This allows businesses such as office towers and sports venues to deploy on-premise 5G and gives them the central units, radios, and accompanying software for operating these networks.
GLW stock gives investors this 5G access at a reasonable price. Shares go for 17 times forward earnings and offer a generous 3.9% dividend yield.
American Tower (AMT)
Another way to profit from the spread of 5G is through owning the facilities themselves. American Tower (NYSE:AMT) is the leading real estate investment trust (REIT) focused on data centers and towers.
American Tower owns more than 220,000 cell phone towers around the world. More than 40,000 of these are in the United States and these generate about half of the company’s revenues. The firm operates far more towers in emerging markets such as Brazil and India which generate less revenue today but have more growth potential as internet usage and spending power rise in those markets.
American Tower also made a big acquisition in data centers. This gives the firm more exposure to the overall growth of the communications market. American Tower’s large size and access to relatively cheap capital give it a sustainable competitive advantage over its smaller peers. As the need for mobile data inexorably grows, American Tower will capture more of that revenue.
On the date of publication, Ian Bezek held a long position in QCOM and AMT stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
