How to Take Advantage of the 5G Growth and potential companies to invest in
As a trader invested in the financial markets, you have likely heard the craze about 5G. This talk has been going on for so long and has mostly been about Huawei, the Chinese telecommunication giant that has been rebuked by the West. The Trump administration has been leading the charge against the company, asking its allies to avoid using its devices in 5G. While the focus has been on Huawei, which is a private Chinese company, there are other ways you can invest in the 5G wave.
Read our in depth about Us Huawei ban.
What is 5G?
The simplest way to explain 5G is that it is a telecommunication standard that will be faster than the previous standards. A good way to explain this is that of a movie download. Today, to download a 2GB movie takes less than 2 minutes using the fastest networks. In the past, this was different. It took more than one hour to download such a movie. With 5G, these downloads will be much faster. Estimates say that 5G will be 100 times that of 4G speeds. It will also help networks carry more data in a reliable manner. It will also have low latency, which means that there will be little delay between when the signals are sent and received. This will be a must in the so-called Internet of Things (IoT) applications such as those by driverless cars, robotics, and machine-to-machine communications.
Read also How to invest in future technology
How and on which companies to Invest for 5G
Many companies will benefit from 5G. The first big beneficiaries will be chip companies like QUALCOMM. This is simply because mobile companies like Apple, Samsung, and OnePlus will increase their spending on 5G modems. This demand will mean that these companies will supply more, which will increase their profitability. At the same time, a chip manufacturer like Intel has been ruled out because it will not have a 5G model ready for the foreseeable future.
Another chip company that will benefit will be Nvidia. This is a company that has been creating chips designed for the internet of things. Other chip companies to watch out for are Xilinx, Micron, Advanced Micro Devices (AMD), and Broadcom among others.
In addition to chips, payments are likely to increase as cloud transactions continue to grow. If this is the case, then companies like Square, Visa, Mastercard, and Paypal will continue to grow.
Another company that will likely see increased growth will be Corning. This is the biggest manufacturer of optic fiber, which is the backbone of the 5G network.
Networking companies like Cisco, Barracuda Network, Ericson, and Alcatel, and Aruba networks will see growth.
Mobile devices companies like Apple and Samsung will likely see growth as demand for 5G devices increase. This is because the users will continue to demand faster devices.
On the other hand, companies like AT&T, T-Mobile, Verizon, and China Mobile will be critical for the industry. However, unlike the others, these companies will need to update their networks. This will happen at a time when the companies have taken a lot of debt to acquire content companies. Therefore, the returns to shareholders will likely be reduced.
We just introduced some of them in our post on 6 fields on which you should think about investing for Future Trends