In this article, we discuss the 10 worst 5G stocks to buy according to short sellers along with the latest updates around the 5G industry.
As we move a quarter of the way into the 21st century, the world is paving the way for new technologies to make human lives easier and more advanced. Out of those, 5G and artificial intelligence (AI) are two of the century’s most important innovations.
We discussed the correlation between the two of them in our article about the best 5g stocks to buy according to short sellers. Here is an excerpt from the article:
“In a CNBC interview at the Mobile World Congress Shanghai on June 26, director-general of the GSM Association, Mats Granryd highlighted the deep connection between 5G and AI and suggested that their mutual rise is not accidental. He said that “AI feeds off 5G and 5G feeds off AI.” This is especially evident in China, where the development of standalone 5G networks is well advanced and discussions are already shifting toward 5G Advanced (5.5G). While some countries lag, like the Philippines, Mats pointed out that this dynamic between 5G and AI is most prominent in regions with widespread 5G coverage…
…Mats believes that 5G will follow a similar path to become a common platform worldwide, which will also extend to AI. While some regions may advance faster than others initially, he showed confidence in the fact that everyone will eventually catch up and benefit from the integration of AI with 5G.”
The Outlook For 5G Industry
We also previously discussed the Market Research Future report which expects the 5G market to reach $229.41 billion by 2032, growing at a compound annual growth rate (CAGR) of 40.60% between 2024 and 2032.
According to a 5G Americas report, the wireless telecommunications sector continued to expand in the first quarter of 2024, driven by the widespread growth of 5G technology. Global 5G connections reached nearly two billion. North America’s leading adoption accounted for 32% of all 5G connections and added 22 million new connections, totaling 220 million. Latin America also experienced growth, with 8 million new LTE connections and 9 million 5G connections.
For the future, the 5G Americas forecast suggests that global 5G connections will reach 7.7 billion by 2028, with North America projected to have 700 million. The Internet of Things (IoT) is expected to further drive 5G adoption, with global IoT subscriptions expected to grow from 3.3 billion to 5 billion by 2028.
The Evolution of Mobile Networks with 5G Advanced and 6G
According to a March report by CNBC, telecom executives discussed plans for 5.5G or 5G Advanced at the Mobile World Congress in Barcelona, even as 5G is still being rolled out. The new stage of mobile technology is expected to enable advanced applications like mixed reality headsets, autonomous vehicles, and smart factories, which were initially promised with 5G.
The 5.5G technology will improve network capabilities by increasing data speeds and enhancing connectivity. It will also use AI to optimize networks and reduce power consumption. Huawei expects that 5.5G will begin commercial deployments by 2024, with the potential for much faster download speeds. The focus now is on improving 5G’s commercial relevance and paving the way for 6G in the future.
Moreover, a team of scientists, led by Professor Withawat Withayachumnankul from the University of Adelaide, has created a new polarisation multiplexer that could greatly improve 6G communications. The device works at terahertz frequencies, which are much faster than current wireless systems. It can send multiple data streams at the same time over the same frequency, effectively doubling the data capacity.
The multiplexer is built on a silicon base and has been successfully tested and reduces data loss compared to existing technology. The innovation could lead to faster, more reliable wireless networks and would benefit areas like telecommunications, video streaming, and future 6G mobile networks. The team expects it to drive more research and become available in commercial products within the next decade.
With that, we look at the 10 Worst 5G Stocks To Buy According to Short Sellers.
10 Worst 5G Stocks To Buy According to Short Sellers
Our Methodology
To select the 10 worst 5G stocks according to short sellers, we used ETFs and screeners to identify over 40 stocks that have significant involvement in the 5G industry. Next, we narrowed our list to 10 stocks with the highest short interest. Finally, these stocks were ranked in ascending order of their short interest.
We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Worst 5G Stocks To Buy According to Short Sellers
10. Pure Storage, Inc. (NYSE:PSTG)
Short Interest as % of Shares Outstanding: 3.20%
Number of Hedge Fund Holders: 38
One of the worst 5G stocks on our list, Pure Storage, Inc. (NYSE:PSTG) specializes in delivering data storage and management technologies, products, and services in the U.S. and internationally. The company is gaining recognition slowly in the 5G sector due to its advanced data storage solutions that meet the needs of modern telecommunications networks.
It offers various products tailored to support the infrastructure essential for 5G rollout. Among its known products is the FlashArray, which delivers all-flash storage solutions which is important for managing the high-speed, low-latency demands of 5G networks. Beyond its primary storage solutions, the company has introduced Portworx, a Kubernetes-native technology designed to cater to container-based workloads.
The solution is essential for contemporary applications that utilize a microservices architecture, which is increasingly common in 5G environments. Portworx provides persistent storage, data protection, and disaster recovery features, which improves the agility and resilience of applications in 5G settings.
Furthermore, the company has engaged in key partnerships to strengthen its position in the 5G arena. A recent example is its collaboration with 5G Networks (5GN) in Australia. The partnership highlights how the company’s all-flash solutions can improve data center efficiency.
By integrating two data centers into one with Pure Storage technology, 5GN achieved a 65% reduction in rack space, which led to significant savings in energy and cooling costs while boosting overall performance.
Pure Storage (NYSE:PSTG) has recently reported positive financial results for fiscal Q2 2025 and surpassed its own forecasts. The company achieved revenue of $763.8 million, which beat the projected $755 million and showed an 11% year-over-year increase. Additionally, its non-GAAP operating income reached $138.6 million, which exceeded the expected $125 million.
Despite these encouraging figures, the company faced some challenges. IT budget constraints, driven by increased spending on AI technologies, have put pressure on the company. Furthermore, sales of its cloud-based Evergreen//One service have been slower than anticipated, which could impact its ability to maintain its current growth trajectory.
The company expects revenue for the current quarter to be around $815 million, slightly above the forecast of $812 million. However, its anticipated adjusted operating income of $140 million falls short of the estimate of $148 million.
Additionally, the company projects an adjusted operating margin of 17.2%, which is below the expected 18.2%. For the full fiscal year 2025, the company forecasts revenue of $3.1 billion, which is slightly lower than the earlier estimate of $3.14 billion.
Several analysts have adjusted their views on the company following these developments. On August 29, Lake Street reduced its price target from $70 to $68 but maintained a Buy rating. The adjustment showed concerns over slower cycles in large enterprise storage-as-a-service deals and a lowered estimate for the total contract value (TCV) to be sold.
On the same day, Stifel also decreased its price target from $65 to $60 and kept a Hold rating due to ongoing uncertainty in the demand environment. UBS lowered its price target from $47 to $45 and maintained a Sell rating, citing disappointment in contract value sales and challenges in product growth.
Despite these hurdles, Pure Storage (NYSE:PSTG) has made progress in expanding its subscription services and improving its AI-ready storage solutions. The company’s hybrid cloud and AI initiatives, including new offerings like Portworx and Pure Fusion, have gained traction.
Additionally, a partnership with Nvidia has strengthened its AI storage capabilities, as evidenced by its certification for Nvidia DGX SuperPOD. The advancements position the company well for future growth, even as it navigates current market challenges.
Pure Storage (NYSE:PSTG) was held by 38 hedge funds in the second quarter and the stakes amounted to $1.028 billion. Polar Capital is the top shareholder of the company and has a position worth $100.4 million as of Q2.
9. Ciena Corporation (NYSE:CIEN)
Short Interest as % of Shares Outstanding: 3.34%
Number of Hedge Fund Holders: 38
Ciena Corporation (NYSE:CIEN) is a leading player in the global networking systems and software industry. The company is mainly known for its expertise in optical connectivity and is often recognized as a major force in this sector. Its portfolio includes a wide range of products and services designed to enhance telecommunications networks, such as optical network switches and routing platforms, as well as undersea cable technology.
Ciena’s (NYSE:CIEN) known clients include AT&T, Deutsche Telekom, and Verizon Communications. The company also offers software solutions through its Blue Planet platform, which uses machine learning to optimize network operations and prevent disruptions.
The company plays a significant role in the 5G transition. It offers advanced solutions for upgrading wireline networks and using automation to streamline operations. Its technology includes Network Functions Virtualization and Software-Defined Networking, which help modernize network systems.
The company’s products, such as versatile switching and routing tools, are built to handle the needs of 5G, which make service delivery and network management more efficient. It also provides expert services to assist operators in managing the shift from 4G to 5G.
While Ciena (NYSE:CIEN) is a noteworthy player in the 5G industry and many analysts view it in a positive light, some analysts remain pessimistic about the company for the short term. On September 10, TipRanks reported that Citi analyst, Atif Malik maintained a Sell rating on the company stock with a $44.00 price target. The analyst’s negative outlook stems from concerns that, despite a strong performance in the July quarter due to increased demand from cloud providers, order volumes are expected to decline in the next quarter.
He also noted that the recovery for telecommunications service providers, which make up more than half of the company’s sales, is anticipated to be slow with no major improvement in profit margins. Malik believes the company’s stock is currently overvalued, as the company is unlikely to gain significantly from early AI deployments.
In Q2, 38 hedge funds held positions worth $643.671 million in Ciena (NYSE:CIEN). Atreides Management is the company’s most prominent shareholder with nearly 3.6 million shares worth $173.078 million, as of June 30.
Diamond Hill Capital stated the following regarding Ciena Corporation (NYSE:CIEN) in its fourth quarter 2023 investor letter:
“Other bottom contributors in Q4 included Coterra Energy, VF Corporation andCiena Corporation (NYSE:CIEN). Networking systems company Ciena’s customers are working through their inventories, creating some uncertainty around near-term demand. However, the company’s cloud customers have helped offset some of this uncertainty and, longer term, we believe Ciena has a meaningful opportunity to take share in the switching and routing and optical markets.”
8. Juniper Networks, Inc. (NYSE:JNPR)
Short Interest as % of Shares Outstanding: 3.86%
Number of Hedge Fund Holders: 45
Juniper Networks, Inc. (NYSE:JNPR) is a global networking company headquartered in California. The company specializes in developing and marketing a range of networking products, including routers, switches, network management tools, security solutions, and software-defined networking technologies.
According to the company, 5G success requires integrating several network components and automation for better management, security, and service quality. Its solutions include Open RAN for flexible and innovative network setups, Cloud Metro for consistent and cost-effective service delivery, and automation tools to ensure a responsive and reliable network.
The company also provides strong security across the network and cloud-native architecture for smooth operations in hybrid environments. These tools help service providers enhance their 5G networks and meet customer expectations.
In January, Juniper Networks (NYSE:JNPR) announced that it is being acquired by Hewlett Packard Enterprise (NYSE:HPE). The deal is expected to be completed in late 2024 or early 2025.
While the company is a key player in the 5G industry, the acquisition does not leave much room for stock price growth. The $14 billion deal allows HPE to acquire the company for $40 per share while the company’s stock was at $38.60 at the September 13 market close.
Juniper Networks’ (NYSE:JNPR) stock was held by 45 hedge funds, at a combined value of $1.114 billion in the second quarter. As of June 30, Pentwater Capital Management owns 8.875 million shares of the company, valued at $323.582 million, and is the company’s most significant shareholder.
7. Skyworks Solutions, Inc. (NASDAQ:SWKS)
Short Interest as % of Shares Outstanding: 4.17%
Number of Hedge Fund Holders: 24
Skyworks Solutions, Inc. (NASDAQ:SWKS) is a California-based semiconductor company. The company was founded with a focus on high-performance analog semiconductors and it designs and manufactures a range of products that cater to various sectors including mobile devices, automotive, and industrial applications.
The company’s offerings include low-noise and power amplifiers, RF switches, and power management chips. Over the years, it has expanded its product portfolio and market reach through strategic acquisitions, including notable purchases such as Avnera and the Infrastructure & Automotive business from Silicon Labs.
In Q2, 24 hedge funds held the company shares, valued at $826.625 million. As of June 30, Pzena Investment Management is Skyworks’ (NASDAQ:SWKS) largest shareholder with 4.09 million shares, worth $435.943 million.
The company is leading the development of essential technologies for 5G connectivity. Its SKY5 platform provides advanced solutions that drive high-speed, reliable 5G performance across both infrastructure and user equipment.
The platform includes Sky5 Ultra, which offers a compact, high-efficiency design for top-tier 5G devices, and Sky5 LiTE, a streamlined solution aimed at mass-market 5G applications. The products support a wide range of bandwidths and are engineered to optimize performance, battery life, and network speed, which facilitates rapid and effective 5G deployment.
Skyworks (NASDAQ:SWKS) is one of the worst 5G stocks to buy according to short sellers with a short interest of 4.17%. In addition, analysts also seem a little pessimistic about the stock as only 6 out of 29 analysts that have covered the stock have a Buy or better rating on it.
On July 31, Susquehanna analyst Christopher Rolland maintained a Hold rating on the stock due to several factors including potential revenue loss from a significant Apple customer and a decline due to Qualcomm socket replacement. Moreover, short-term profitability may be impacted by the company’s investment plans for 2025.
The company’s growth in the Broad Markets segment is below expectations, and while gross margins are expected to be slightly lower, cost reductions may aid margin improvement. The latest Hold rating for the company was given by Benchmark Co. analyst Cody Acree on September 10.
6. Marvell Technology, Inc. (NASDAQ:MRVL)
Short Interest as % of Shares Outstanding: 4.22%
Number of Hedge Fund Holders:
Marvell Technology, Inc. (NASDAQ:MRVL) is a prominent developer and manufacturer of semiconductors and related technology solutions. It is a notable name in the industry with a global footprint and over 10,000 patents. The company is known for driving technology innovations in several tech industries such as data infrastructure, 5G networks, cloud computing, and storage.
The company’s products range from data processing units (DPUs) and custom ASICs to security solutions and networking infrastructure processors. Its ThunderX and OCTEON series are deployed across important applications in cloud services, telecom, and automotive industries. Marvell’s (NASDAQ:MRVL) contributions to the semiconductor industry include collaborations with leading firms such as Microsoft Azure, Huawei, and Ericsson, to help drive 5G infrastructure and advanced cloud services.
The company’s 5G offerings include scalable, programmable, and high-performance silicon solutions that help carriers innovate sustainably. Its technology supports energy-efficient, cloud-optimized services with low total cost of ownership. The company collaborates closely with partners to ensure secure, reliable 5G connectivity for critical applications, from VR and AR to industrial automation.
Marvell’s (NASDAQ:MRVL) OCTEON 10 family features advanced 5nm baseband processors optimized for 5G and LTE-A networks. The OCTEON 10 Fusion baseband processor, known for low latency and high data rates, is designed for integrated and virtualized RAN architectures, with support for Massive MIMO and various radio frequencies. It offers programmability for future 5G enhancements and supports global 5G deployments.
It also provides 5G Open vRAN accelerators, which use PCIe card format for high-performance and cost-effective cloud-based RAN virtualization. The accelerators improve the capabilities of Open RAN and cloud ecosystems. Moreover, the company’s OCTEON 10 DPU family focuses on hyperscale cloud workloads, 5G transport, and edge inferencing, which offer significant compute power, energy efficiency, and integrated security features. The family supports high-speed interfaces like PCIe 5.0 and DDR5.
Marvell (NASDAQ:MRVL) ranks 6th on our list of worst 5G stocks to buy according to short sellers. Moreover, it was also a part of our September 10 article: 20 Worst Performing AI Stocks of Last Week, after declining 15.13% in the first week of September.
In the second quarter, the company’s stock was held by 74 hedge funds, at a combined value of $3.57 billion. Matrix Capital Management has been the company’s largest shareholder since the second quarter with over 15 million shares, worth $1.052 billion.
Artisan Partners stated the following regarding Marvell Technology, Inc. (NASDAQ:MRVL) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in CCC Intelligent Solutions, Marvell Technology, Inc. (NASDAQ:MRVL) and Insmed. Marvell Technology is a semiconductor company offering networking, secure data processing and storage solutions to customers worldwide. We believe Marvell has among the broadest range of intellectual property in technological areas (e.g., high-bandwidth data switching and storage applications) that position it well for the growing requirements of data centers, wireless networks and autos. Several of the company’s product lines (e.g., custom silicon, optical connectivity and switching) are benefiting from the growth of AI data centers. And we believe a significant opportunity exists for the company to help design and manufacture cost-effective custom data center chips that would help cloud providers reduce their reliance on expensive graphics processing units (GPUs). Furthermore, like many other semiconductor companies, a portion of its business may be poised for a cyclical recovery after the industry’s recent inventory correction.”
5. Elastic N.V. (NYSE:ESTC)
Short Interest as % of Shares Outstanding: 4.33%
Number of Hedge Fund Holders: 58
Elastic N.V. (NYSE:ESTC), known for its expertise in search and artificial intelligence, offers a range of hosted and managed solutions that operate across hybrid, public, private, and multi-cloud environments, both in the U.S. and globally.
The company has gained recognition in the 5G sector due to its data analytics and search capabilities, which are essential for managing the extensive data generated by 5G networks. One of its flagship products is the Elastic Stack, which allows organizations to ingest, store, and analyze large volumes of structured and unstructured data in real time, a feature crucial for handling the complexities of 5G data environments.
The company’s Elastic Security platform is another significant offering, integrating functions such as Security Information and Event Management (SIEM), Security Orchestration, Automation, and Response (SOAR), and endpoint protection.
The comprehensive approach provides organizations with end-to-end visibility into their network operations, which is vital for detecting vulnerabilities and responding to threats promptly, especially within the dynamic context of 5G networks.
In 2023, it formed a partnership with Wilab to improve network observability and automation for 5G operators. The collaboration was aimed to integrate Elastic’s data analytics tools with Wilab’s Network Data Analytics Function (NWDAF).
It improves operators’ ability to monitor and manage their networks with greater efficiency. The integration facilitates anomaly detection, forecasting, and machine learning workflows, which enables more agile and precise network management.
For the first quarter of fiscal 2025, Elastic (NYSE:ESTC) reported non-GAAP EPS of $0.35, which surpassed the average analyst estimate of $0.25. Revenue for the quarter also exceeded expectations, reaching $347 million. It was $2.39 million above the forecast and represented an 18.1% increase year-over-year.
Despite this strong performance, the company’s guidance for the second quarter indicates a more modest growth trajectory, with revenue expected to be between $353 million and $355 million, a 14% increase from the previous year. The cautious outlook suggests potential difficulties in customer segmentation and broader economic challenges.
The company recently underwent a significant reorganization of its sales segmentation to better target large enterprises and mid-market customers. The restructuring has led to disruptions in the sales process and resulted in slower deal closures and a shortfall in customer commitments. Additionally, tighter budgets in Europe have caused delays in some deals, contributing to the results for the quarter. It is one of the worst 5G stocks to buy according to short sellers.
On a positive note, Elastic (NYSE:ESTC) has made significant advancements in product innovation. New features, such as Automatic Import for SIEM data onboarding and enhancements to their AI platform, have advaned its technological capabilities. The introduction of Elastic Cloud Serverless is another highlight, which strengthens the company’s position in the market.
According to our database, 58 hedge funds held stakes in Elastic (NYSE:ESTC) in the second quarter, with positions worth $1.2 billion. With 1.69 million shares, valued at $192.587 million, Tiger Global Management LLC is the largest shareholder of the company, as of June 30.
Artisan Partners stated the following regarding Elastic N.V. (NYSE:ESTC) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in Liberty Formula One, Elastic N.V. (NYSE:ESTC) and Onto Innovation. Elastic is a software company that specializes in search and data analysis solutions. Elastic’s search, observability and security solutions are built on the Elastic Search AI Platform, which thousands of companies use, including more than 50% of the Fortune 500. Customers use the software to gain visibility into their data, reduce mean-time-to-resolution and drive actionable outcomes. We believe the company will benefit from the rise of generative artificial intelligence (AI). It provides a differentiated offering due to the combination of a unique pricing model based on consumption, products that handle numerous data types and volumes, and an open architecture environment that offers generative AI development flexibility.”
4. MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI)
Short Interest as % of Shares Outstanding: 4.84%
Number of Hedge Fund Holders: 28
MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) is a global provider of high-performance semiconductor products that support advanced communication and sensing applications.
The company specializes in radio frequency (RF), microwave, millimeter wave, and photonic semiconductor devices. The technologies are widely used across industries, including aerospace, defense, telecommunications, and data centers. The company’s product portfolio covers areas such as optical networking, satellite communication, and high-speed data solutions.
MACOM (NASDAQ:MTSI) provides high-power Front End Modules (FEM) that help boost and improve signals in 5G systems. The FEMs are built to handle both sending and receiving signals, using a power amplifier to strengthen outgoing signals and a low noise amplifier to make incoming signals clearer.
They also have a switch to control whether the system is sending or receiving, along with a component that helps guide the signal. These small, powerful units are ideal for 5G antennas and can be used in both large antenna setups or with other signal processing chips to improve performance.
Additionally, the company provides various high-power switches and Low Noise Amplifier (LNA) modules for different 5G base stations. Its modules work with frequencies up to 6GHz and come in different sizes for different needs. For smaller base stations, the company offers switch modules that handle up to 20 watts of power.
For larger base stations, it has special PIN diode switch modules that manage up to 160 watts of power. These modules are known for their broad frequency range, low noise, and high power capacity, which make them ideal for both commercial and military communication systems.
While MACOM (NASDAQ:MTSI) is one of the worst stocks to buy according to short sellers, hedge funds were quite bullish on the stock in Q2. 28 hedge funds held the stock with positions worth $383.524 million, up from 17 hedge funds with positions worth $232.820 million in the previous quarter. Millennium Management increased its holdings in the company by 959% to over 1.34 million shares worth $149.2 million, making it the company’s most prominent shareholder, as of June 30.
3. Western Digital Corporation (NASDAQ:WDC)
Short Interest as % of Shares Outstanding: 5.08%
Number of Hedge Fund Holders: 80
Western Digital Corporation (NASDAQ:WDC), a major data storage company, is a key player in the storage industry, which is known for its broad range of essential data storage products. The company has carved out a significant role in the 5G landscape with its advanced storage solutions, which cater to the needs of 5G-enabled devices and applications.
A standout product in this area is the iNAND MC EU511 embedded flash drive (EFD), designed to meet the demanding performance standards of next-generation mobile devices that utilize 5G technology.
The company is focused on supporting 5G technology, which is clear from its engagement in developing high-performance edge storage solutions. As 5G networks promise faster speeds and lower latency, the need for high-capacity storage to manage the massive data generated by billions of Internet of Things (IoT) devices grows.
The company’s iNAND MC EU551 and EU311 models are designed to provide superior read and write speeds, which are necessary for data-heavy applications and strengthen its position in this rapidly evolving market.
At a stake value of over $4.057 billion, 80 hedge funds held positions in Western Digital (NASDAQ:WDC) in the second quarter. As of June 30, Millennium Management is the most significant shareholder in the company and has a position worth $379.707 million.
The company has faced several challenges that have impacted its financial performance. In the fourth quarter of fiscal 2024, it reported revenue of $3.76 billion, which shows a 9% sequential increase. Despite this growth, the company reported a non-GAAP loss per share of $1.72 for the fiscal year, which is possibly a sign of ongoing issues with profitability. It ranks 3rd on our list of the worst 5G stocks to buy according to short sellers.
The market response to the company’s financial performance has been mixed. On August 1, Summit Insights downgraded the stock from Buy to Hold as it noted that while there have been improvements in average selling prices and gross margins, profitability enhancements are still limited. Summit Insights also suggested that the storage and flash industry might be nearing the end of its recovery phase.
On September 10, Goldman Sachs maintained a Neutral rating with a $79 price target, following a presentation at the Communacopia & Technology conference where it was highlighted that enterprise SSD demand, driven by AI, remains strong and is expected to contribute significantly to the company’s NAND bits in the coming fiscal year.
Meanwhile, on the same day, Citi analyst Asiya Merchant lowered the price target from $95 to $85 but maintained a Buy rating, as they acknowledged the volatility in NAND fundamentals while remaining positive about the supply/demand dynamics.
Despite these hurdles, Western Digital (NASDAQ:WDC) has made significant progress in innovation. The company has introduced new high-capacity SSDs aimed at gaming and enterprise applications, and its strong foothold in the enterprise SSD market has driven revenue growth, particularly due to rising demand for cloud storage solutions.
The company projects first-quarter fiscal 2025 revenue between $4 billion and $4.2 billion, which signals a hopeful outlook for continued growth despite the current challenges. The management team remains dedicated to enhancing profitability while navigating a complex business environment.
Parnassus Investments stated the following regarding Western Digital Corporation (NASDAQ:WDC) in its Q2 2024 investor letter:
“We re-initiated a position in Western Digital Corporation (NASDAQ:WDC), a manufacturer of memory semiconductor chips and hard disk drives, as we believe earnings expectations are far too low. Semiconductors have been another of our most-alpha-generative industries, thanks to the industry’s secular tailwinds and our in-house expertise. Western Digital stands to benefit from the rapid growth of memory-hungry AI applications. The valuation for Western Digital was low relative to its peers, giving us a way to participate in AI at a reasonable valuation.”
2. Akamai Technologies, Inc. (NASDAQ:AKAM)
Short Interest as % of Shares Outstanding: 6.89%
Number of Hedge Fund Holders: 31
Akamai Technologies, Inc. (NASDAQ:AKAM) is an American technology company that specializes in content delivery networks (CDNs), cybersecurity, cloud services, and DDoS mitigation solutions.
The company operates a globally distributed server network that enhances digital content delivery for websites and web services. By using its sophisticated edge computing platform, it provides fast, secure, and reliable access to online resources, which helps businesses scale their operations and optimize user experiences.
Akamai (NASDAQ:AKAM) is revolutionizing 5G security through its Carrier Mobile solutions. It helps businesses secure their networks in a mobile-first world. While 5G is revolutionizing the world, it also brings security challenges, including a rise in mobile phishing attacks and the vulnerability of IoT devices, which often lack strong security features.
The company addresses these challenges by offering enterprises secure private network slices, which allow businesses to shield their mobile and IoT devices from risks associated with public mobile networks and minimize vulnerabilities.
Akamai (NASDAQ:AKAM) security solutions help enterprises maintain control over their networks, which provide comprehensive protection for both employees and IoT devices. This empowers businesses to embrace 5G while mitigating the associated risks.
While Akamai (NASDAQ:AKAM) is a 5G stock with some of the highest short interest rates in the 5G segment, analysts seem to disagree with the sentiment. The company’s delivery services have been facing challenges due to macroeconomic conditions and geopolitical factors, which have impacted its growth in recent quarters. However, its reinvestments in growth areas offset those concerns.
On August 29, TipRanks reported that Tigress Financial analyst, Ivan Feinseth reaffirmed his Buy rating for the company with a price target of $140. He highlighted that the company’s successful shift towards becoming a major provider of cloud-based security services is helping mitigate the decline in its content delivery segment.
Feinseth noted that the company’s integration of Edge Compute solutions is driving growth, supported by increased demand for cloud, Edge, and distributed computing. He also mentioned Akamai’s (NASDAQ:AKAM) strong financial position, with healthy cash flow and a solid balance sheet, which allowed the company to invest in growth and pursue share repurchases.
In the second quarter, 31 hedge funds had stakes worth $361.203 million in Akamai (NASDAQ:AKAM). As of June 30, Alyeska Investment Group owns 1.13 million of the company shares worth $102.1 million and is the most prominent shareholder of the company. The most prominent short positions in the company have been held by Citadel Investment Group and PEAK6 Capital Management, worth $35.9 million and $27.9 million as of Q2, respectively.
Diamond Hill Long-Short Fund stated the following regarding Akamai Technologies, Inc. (NASDAQ:AKAM) in its fourth quarter 2023 investor letter:
“Akamai Technologies, Inc. (NASDAQ:AKAM) is a legacy content delivery network (CDN) solutions provider which management has recently pivoted to enterprise and network security as well as distributed cloud computing. However, these markets are intensely competitive, and Akamai has yet to prove it can differentiate itself from cloud hyperscalers and best-of-breed security companies.”
1. Charter Communications, Inc. (NASDAQ:CHTR)
Short Interest as % of Shares Outstanding: 8.41%
Number of Hedge Fund Holders: 48
Charter Communications, Inc. (NASDAQ:CHTR) functions as a major provider of broadband and cable services for both residential and business clients across the US. As a known company in the 5G sector, its Spectrum Mobile service plays a key role in its efforts to improve connectivity solutions.
The company provides a range of subscription-based services including internet, video, mobile, and voice options. The offerings include a comprehensive suite of broadband connectivity, in-home WiFi, voice communication services, and other broadband solutions.
In June 2023, it chose Nokia to assist with 5G connectivity for Spectrum Mobile users, which represented a significant advancement in its 5G rollout plans. The investment in 5G technology aligns with a wider trend among cable operators to deploy Citizens Broadband Radio Service (CBRS) spectrum. The CBRS spectrum allows the company to develop 5G networks that can ease up traffic from their rented mobile networks, which improves the service experience for their mobile subscribers.
Charter Communications (NASDAQ:CHTR) has recently navigated a challenging financial landscape, which is reflected in a dip in its stock performance. For the first quarter, the company reported a stagnant revenue at $13.7 billion and a modest 8% rise in net income to $1.1 billion. Although net income saw growth, the figures fell short of what analysts had anticipated, which impacted investor sentiment.
In the second quarter, the company experienced a decline in its total internet customer base, dropping by 149,000 to 30.4 million. Despite this downturn, the company’s revenue was $13.7 billion, which surpassed the forecasted $13.6 billion. It tops our list of the worst 5G stocks to buy according to short sellers.
On a positive note, the company’s mobile sector grew by 557,000 lines, reaching a total of 8.8 million. Its EBITDA rose by 2.6% to $5.7 billion. Additionally, EPS climbed from $8.05 to $8.49, which beat the anticipated $7.98, partly due to share buybacks. CEO Chris Winfrey highlighted ongoing efforts to enhance operational efficiencies and service capabilities, which have contributed to improved EBITDA.
Analysts remain cautious about the company’s future. On September 10, Citi upgraded Charter Communications (NASDAQ:CHTR) to Neutral from Sell with a $350 price target. The upgrade is owed to a reassessment of the company’s valuation and a more stable broadband operating environment for the third quarter. The improvement in the Affordable Connectivity Program (ACP) retention also indicates better-than-expected results in this area, as per the firm.
Nonetheless, the firm still leans towards large-cap telecom stocks over cable stocks, though telecom valuations are beginning to acknowledge stronger fundamentals in wireless sectors.
Adding to the company’s prospects, it recently announced a significant partnership with Warner Bros. Discovery. The agreement will include the premium Max (Ad Lite) service, including all HBO and Max content as well as Discovery+, within Spectrum TV Select packages at no additional cost. The new deal represents a major shift for the company and places it as a more competitive player in the evolving media landscape.
In Q2, 48 hedge funds had investments in Charter Communications (NASDAQ:CHTR), with positions worth $4.49 billion. Harris Associates is the top investor in the company as of the second quarter and has a stake of nearly $1.9 billion, as of the second quarter.
Parnassus Investments stated the following regarding Charter Communications, Inc. (NASDAQ:CHTR) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer, NICE and Charter Communications, Inc. (NASDAQ:CHTR). NICE is a leading cloud contact center software company. Charter’s stock had fallen due to near-term concerns, which we believe will not have a major impact on the long-term value of the business. Charter Communications has had several issues that created short-term uncertainty. We assessed that these issues have limited impacts on the long-term value of the business and initiated a position to take advantage of the stock’s historically low valuation.”
While we acknowledge the potential of Charter Communications, Inc. (NASDAQ:CHTR) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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