By Iain Butler: Chief Investment Advisor, Motley Fool Canada Fool
5G is the fifth and newest generation of wireless networking technology, with lower latency (the time between an input or request for data and the network’s response) and download speeds up to 100 times faster than the previous standard, 4G. This has raised the attention of many investors who are interested in finding 5g stocks to buy for the long haul.
In the months, and years ahead, 5G technology will become the most important generation of wireless connectivity thanks to improvements in telecommunications, virtual payments and cybersecurity. But this massive project will encompass wide swathes of the global economy for years — from small tech and infrastructure companies making 5G equipment and small-cell radios to the actual mobile network providers delivering 5G service.
When was 5G released in Canada?
5G first went live Canada thanks to Rogers Communications (TSX:RCI.B) in September of 2020.
Currently, there are four 5G service providers in Canada: Rogers, Bell (TSX:BCE), Telus (TSX: T) and Quebecor (TSX:QBR.B). While these providers are a baseline way to gain exposure to the 5G movement, investors may find the biggest profits in the underlying equipment, infrastructure, and tech.
What is the Economic Impact of 5G?
According to GSM, 5G could unlock $150 billion in new GDP growth in Canada over the next two decades in almost every sector from manufacturing to construction and real estate.
The Best 5G Stocks to Start Investing In
Sure, you could invest in telco providers like Verizon (NYSE:VZ) in the U.S. or Telus here at home, but there are so many more opportunities to potentially make money with this new technology.
Think about it this way: each of these companies are going to need the underlying equipment, infrastructure and components to build out their phones and mobile networks. What we’re talking about here are the company’s that provide the picks-and-shovels, so to speak, that the 5G era requires to reach its potential.
This means there are opportunities for investors to make money in semiconductor manufacturers (chipmakers), hardware providers and infrastructure companies that own the towers that underlie the entire network.
It’s no secret that in a few years, 5G is going to be the only network that matters to telecom investors, making this the perfect time to start investing.
Let’s zero in on a few specific companies from the buckets that we find most intriguing:
5G Chip Makers (aka Semiconductor Makers)
As with all tech, the basic 5G building blocks semiconductors — the computer chips that calculate data and execute commands. These companies build the chips that help 5G work:
Skyworks Solutions (NASDAQ:SWKS)
A key smartphone and consumer electronics supplier, the company has used its connectivity know-how to enter other markets, including smart home devices, connected industrial equipment, and medical devices. It has also developed some of the basic components that power the next-gen 5G network. Though on the smaller-side of the chipmaking industry, Skyworks has a healthy balance sheet to promote further growth as the next wave of connectivity services comes online.
NVIDIA graphics processing units (GPU) are best known for high-end video games, but they’ve found uses in many other applications, 5G included. 5G networks promise not only faster download speeds but also the ability to handle higher traffic and intelligently route network signals where they’re needed most.
GPUs are well suited for this task, and they’re already being used by telecoms and equipment makers. In addition, GPU-hungry video games — especially cloud-based video games streamed over a network — could be one of the biggest beneficiaries of 5G deployment among consumer products. Already a huge enterprise, this GPU leader is finding a potentially massive new market in 5G and has a history of making technological advancements.
Equipment and Infrastructure
Arista Networks (NYSE:ANET)
Data center and internet infrastructure company Arista Networks is an often overlooked 5G stock. Because 5G will be carrying massive amounts of data — like ultra-high-definition video streaming, or communications for network-connected vehicles — data centers will play a key role in computing all of the new digital information. Arista is a top equipment provider with open-source hardware and software-defined management tools, and it will benefit from 5G’s accompanying boom in mobile data.
Real Estate Stocks
Crown Castle (NYSE:CCI)
Crown Castle owns and operates real estate, including buildings and cell tower sites crucial to the function of mobile networks and internet infrastructure at large. This company also runs fiber-optic networks that connect 5G small-cell sites to the larger Internet.
Though primarily an investment income vehicle, this REIT has grown its share price significantly over time as mobility becomes increasingly important around the globe. And with the flow of data continuing to boom — thanks in large part to data-intensive applications like video and cloud-computing operations — the communications real estate assets that Crown Castle specializes in will be more important than ever.
Invest in 5G Stocks for the Long Term
Like we’ve seen with previous telecommunications upgrades, 5G promises to change the landscape of the industry and continue to make our world more mobile. With another digital revolution potentially coming, it makes sense to start investing now and for the long haul of 5g’s continued development. With upgrades encompassing so many different areas of Canada’s economy, investing in 5G stocks could continue to pay off for a long time.
Our Stock Advisor Canada analysts have put together a special report with 5 of our favorite 5G stocks. Get the report today for free!
Tom Gardner owns shares of Arista Networks. The Motley Fool owns shares of Arista Networks, Crown Castle International, NVIDIA, and Skyworks Solutions.