The fifth generation of wireless networks is called “5G.” This technology provide us with the fastest, most reliable, most responsive connectivity we’ve ever seen.
With ultra-low latency (the time between data requests and system responses) and extremely high processing speeds, it can do more than improve our wireless home internet connections. It can also support new health care technology, artificial intelligence, virtual reality, and even autonomous cars.
5G technology is quickly outgrowing 4G networks. The companies behind this new generation of wireless communication could be worthy long-term investments. Let’s take a closer look at 5G stocks and see if they’re right for your portfolio.
What are 5G stocks?
5G stocks are companies that are paving the way for 5G wireless networks. These stocks are a diverse bunch. They range from semiconductor companies building computer chips to real estate companies building broadcasting towers to wireless carriers supporting 5G.
Though it’s quickly surpassing 4G, 5G technology is still fairly new. It was first introduced in Chicago and Minneapolis in April 2019. Rogers Communications (TSX:RCI.B) brought it to Canada in September 2020.
So far, Canada has five major 5G service providers:
- Rogers Wireless
- Bell Mobility (TSX:BCE)
- Telus Mobility (TSX: T)
- Quebecor (TSX:QBR.B) through Videotron
So far, Canada lags behind other countries in terms of 5G deployment and development. This is partly because the pandemic slowed the economy, and partly because Canada is the second-largest country in the world. Building 5G networks requires intense capital investment and strong telecom companies.
The companies mentioned above have to scale upward to secure the cash flow needed to deploy 5G across such a large landscape. If they can pull it off—which it looks like they will—they could be worthwhile long-term investments.
Investing in 5G Canadian stocks
Right now, the best opportunities in the 5G market sector are in companies that are paving the way for 5G technology. These include semiconductor manufacturers, infrastructure providers, and wireless technology companies.
To help you understand the full scope of this fast-growing industry, let’s look at leading companies from these three sectors.
Top 5G semiconductor companies
In order for 5G networks to achieve high speeds and more connectivity, they need powerful and reliable computer chips capable of quickly processing tonnes of data.
That’s where semiconductors come in. These tiny computer chips have lightning-fast computing power, making 5G technology possible.
Currently, demand for semiconductors is hot—and not just from those developing 5G networks, but also from industry. The biggest semiconductor companies in the 5G sector are the United States, though keep your eyes open for Canadian companies rising in this hot field.
For those looking for a solid long-term investment in semiconductors, here are three companies to consider.
|Semiconductor Stock||Market Cap||Description|
|NVIDIA (NASDAQ:NVDA)||$464 billion||Leading manufacturer and designer of GPU, a type of semiconductor used in gaming consoles, data centres, and artificial intelligence.|
|Broadcom Ltd. (NASDAQ:AVGO)||$226 billion||Top maker of connectivity chips used to handle Wi-Fi and Bluetooth.|
|Skywork Solutions (NASDAQ:SWKS)||$18.3 billion||Producer of semiconductors used in wireless handsets and wireless routers.|
NVIDIA was an early pioneer in GPUs (graphics processing units), which are used to render video game graphics. These days, NVIDIA has developed its chips for a number of applications, including 5G networks.
GPUs are well suited for 5G deployment, and already they’re 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 development among consumer products.
Already a huge enterprise, this GPU industry leader is finding a potentially massive new market in 5G and has a history of making technological advancements.
Broadcom is a major chip designer whose semiconductors are key components in 5G base stations. It was the first company to complete an end-to-end 5G switching portfolio, which brought together radio and fixed-line traffic onto a standard, Ethernet-based infrastructure. It also manufactures semiconductors for 5G smartphones, with Apple being one of its foremost clients.
A key smartphone and consumer electronics supplier, Skyworks Solution 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 it’s not as large as the previous two chipmakers, Skyworks has a healthy balance sheet that can promote further growth as the next wave of 5G connectivity services comes online.
Top 5G equipment and infrastructure stocks
Semiconductors might be the brain behind 5G. But without equipment and infrastructure companies, there would be nothing to house the chips, nor any way to connect chips to the larger network.
Equipment and infrastructure companies, then, are those businesses that build hardware for 5G networks, as well as lay fibre-optic cables and build towers to connect networks together. As with semiconductor stocks, many of the biggest names in this sector are in the United States.
We’ll take a look at some Canadian equipment and infrastructure companies under “wireless provider stocks” below. For now, here’s three of the biggest equipment and infrastructure stocks.
|Equipment and Infrastructure Stocks||Market Cap||Description|
|Artista Networks (NYSE:ANET)||$35 billion||Top software and hardware provider.|
|Corning (NYSE:GLW)||$30 billion||Glass and ceramics manufacturer that makes fibre-optic technology for 5G networks.|
|Ciena (NYSE:CIEN)||$8 billion||Major provider of network equipment and software to telecommunications companies.|
Data centre 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 centres 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.
Corning’s role in powering 5G networks is anything but modest: this specialty glass and ceramics company is responsible for making firer-optic cables that can support the high speeds of 5G technology.
In addition to equipping 5G companies with special cables, Corning also builds cell antenna and software for 5G networks in office buildings and public venues. The company has been around for a while, and it even pays out a dividend to shareholders.
Ciena is a telecommunications networking company that supplies equipment and software to a number of clients, including cable providers, telecommunications companies, and even governments. The company entered the 5G race by developing routers that will support the high processing speeds of 5G technology. Supply chain hiccups and disappointing manufacturing numbers have knocked this key 5G stock down in recent months. Even so, Ciena could be a good long-term pick.
Top 5G wireless provider stocks
5G wireless providers are those companies that are selling 5G networks to consumers. Many of these companies are also responsible for building 5G infrastructure in Canada, making them partly infrastructure stocks, too.
For those looking for the best 5G stocks in Canada, here are three names you should be familiar with.
|5G Wireless Provider Stocks||Market Cap||Description|
|BCE (TSX:BCE)||$62 billion||Wireless and internet service provider that also powers Canada’s fastest 5G network.|
|Telus Corp (TSX:T)||$44 billion||One of the three big wireless providers in Canada with 10.75 million phone subscribers nationwide.|
|Sierra Wireless (TSX:SW)||$736 million||Designer and provider of wireless communications equipment.|
BCE is the largest player in Canada’s communications sector with over 11.7 million subscribers in 2021. It’s also one of Canada’s most aggressive developers of 5G technology, having spent roughly $2 billion in 2021 on high-speed networks.
For the second year in a row, Bell 5G, which is owned by BCE, was ranked the fastest 5G mobile network in Canada, and it can offer 5G coverage to over 70% of Canada. BCE stock pays a hefty dividend, too, which the company has raised for 14 years in a row.
Telus is another big wireless provider in Canada, supplying wireless internet to around 10.75 million subscribers. The company has committed around $40 billion toward the deployment of 5G networks across Canada, and it has even partnered with crucial 5G companies, such as Nokia, to make this happen.
The stock has a solid yield on its dividend, too, with a steady track record of increasing payouts twice per year.
Sierra Wireless is a tech company that manufacturers the hardware and software necessary for devices to connect with each other, a crucial component in 5G networks. The company is also very bullish on developing hardware for the Internet of Things sector, which they hope will only grow when 5G becomes more established in Canada.
Right now, the company’s market cap is still in the small-cap range, but with its foot firmly in the 5G door, it could be a company to buy for the long run.
Are 5G stocks right for you?
5G stocks are perfect for investors who want to invest in technology and are okay employing a buy-and-hold strategy for the long term. The growth of 5G stocks will likely be slow and sometimes volatile, yet you’ll likely see continued upward growth if you stay invested for 10, 15, even 20 years.
Given Canada’s commitment to develop its 5G technology, these companies will only become more crucial to the country’s telecommunications and mobile networks.
That said, you should still invest only in 5G companies with stable business models and strong cash flow. You might even want to diversify your holding with a variety of the 5G stocks mentioned, which could help hedge your portfolio against industry-specific downturns.