In this article, we will discuss the 5 best 5G stocks to buy now. If you want to read the detailed analysis of the 5G market and its evolution, go directly to 11 Best 5G Stocks to Buy Now.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Market Cap as of August 8: $161.545 billion
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a California-based semiconductor and related products company. Its main products include CPUs, GPUs, chipsets, microprocessors, SoCs, motherboard chipsets, and drivers, among others. On May 11, the company announced that its Xilinx Zynq UltraScale+ RFSoC has enabled 4G/5G radio access network solutions to support the Meta Connectivity Evenstar program.
Despite the poor semiconductor market conditions, Advanced Micro Devices, Inc. (NASDAQ:AMD)’s EPS of $1.05 outperformed the analyst estimates by $0.01 and represented 70.13% YoY growth in revenue after generating $6.55 billion. The company started the quarter with $2.5 billion of cash and cash equivalents and exited with $4.96 billion. The free cash flow for Q2 was recorded at $906 million.
On August 3, Northland analyst Gus Richard reaffirmed an Outperform rating on Advanced Micro Devices, Inc. (NASDAQ:AMD)’s shares and raised the price target from $95 to $105. The price target revision came after the non-GAAP earnings beat Richard’s estimates.
At the end of Q1 2022, 83 hedge funds were loading up on Advanced Micro Devices, Inc. (NASDAQ:AMD)’s shares, compared to 69 in the previous quarter.
Here is what Carillon Tower Advisers had to say about Advanced Micro Devices, Inc. in its Q4 2021 investor letter:
“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Market Cap as of August 8: $165.99 billion
QUALCOMM Incorporated (NASDAQ:QCOM) is a California-based semiconductor and telecom services company. It has more than 100 5G license agreements worldwide and its Qualcomm Snapdragon 5G Modem-RF systems are the world’s first commercial modem-to-antenna 5G solution. QUALCOMM Incorporated (NASDAQ:QCOM) has spent 20.3% of its total sales on R&D expenses which is why it is one of the companies that will be positively impacted by the CHIPS and Sciences Act.
For Q2 2022, QUALCOMM Incorporated (NASDAQ:QCOM) reported a non-GAAP income of $3.356 billion or $2.96 per share, compared to $2.87 estimates. The company beat its revenue consensus by $50 million after generating $10.9 billion, approximately $4 billion over the previous quarter. QUALCOMM Incorporated (NASDAQ:QCOM) generated $2.895 billion of net cash from operating activities and had cash and cash equivalents of $2.676 billion at the end of the quarter.
On July 28, Canaccord analyst T. Michael Walkley maintained a Buy rating on QUALCOMM Incorporated (NASDAQ:QCOM) shares and lowered the price target to $225 from $250. The analyst noted that the company’s leadership position in 5G growth should result in strong share gains with leading smartphone OEMs. The analyst reduced his price target due to multiple compression.
Here is what ClearBridge Investments had to say about QUALCOMM Incorporated (NASDAQ:QCOM) in its Q4 2021 investor letter:
“Market strength continued in the fourth quarter, with only the communication services sector down in the Russell 1000 Value Index. Portfolio returns benefited from the strong performance of semiconductor maker Qualcomm, which has executed exceptionally well in pursuing the transition to 5G, growing both content and share due to its leadership position in cellular technology. The chipmaker recently outlined a number of peripheral growth opportunities outside of mobile markets, including automotive (where it hopes to leverage its strong presence in the automotive infotainment space into advanced driver assistance systems), Internet of Things (including opportunities in the PC market, VR/AR market, and factory automation) and radio frequency (where mmWave adoption globally, including China, would drive substantial upside).”
3. T-Mobile US, Inc. (NASDAQ:TMUS)
Market Cap as of August 8: $181.309 billion
T-Mobile US, Inc. (NASDAQ:TMUS) is an American wireless network operator. According to Ookla, the company has the highest 5G availability and a higher 5G speed than its competitors. The company claims it is 2 years ahead of its competitors in terms of 5G technology. On August 5, S&P Global Ratings raised the issuer credit rating on T-Mobile US, Inc. (NASDAQ:TMUS) to “BBB-” from “BB+”.
Even though T-Mobile US, Inc. (NASDAQ:TMUS) reported missing revenue and EPS estimates, the fundamentals still seem strong. The company reported a net loss of $108 million mostly due to merger-related costs. The company’s services revenues grew 6% on a YoY basis to $15.3 billion. T-Mobile US, Inc. (NASDAQ:TMUS) had 1.7 million new postpaid net customers and 146,000 net prepaid customers in the quarter. Furthermore, the company exited the quarter with over 1.5 million High-Speed Internet customers after the addition of 560,000 customers.
On July 28, Scotiabank analyst Maher Yaghi upgraded T-Mobile US, Inc. (NASDAQ:TMUS) shares to Outperform from Sector Perform and set a price target of $167, up from $153. The analyst expects the company to outperform its competitors and the company will probably see a notable uptake in fixed wireless and mobile/internet bundling. Furthermore, Yaghi sees an improved free cash flow for the company. He noted that the FCF will be “multi-year in nature” and lead to “value accretive” capital returns.
2. Broadcom Inc. (NASDAQ:AVGO)
Market Cap as of August 8: $220.928 billion
Broadcom Inc. (NASDAQ:AVGO) is an American semiconductor company. The company announced its involvement in the 5G technology in 2018 and pledged to make the US a global leader in 5G. As of 2021, the company has over 19,000 patents in its portfolio. Furthermore, according to Broadcom Inc. (NASDAQ:AVGO), 99.9% of all internet traffic crosses at least one Broadcom chip at some point.
Broadcom Inc. (NASDAQ:AVGO) has increased its dividend for the past 11 years. As of August 6, the company has a dividend yield of 2.97% with a quarterly dividend of $4.10. In Q2 2022, the company paid $1.7 billion in dividends, equal to 50% of its free cash flow. Furthermore, the company authorized a $10 billion share repurchase program through December 2023.
On July 20, Deutsche Bank analyst Ross Seymore maintained a Buy rating on Broadcom Inc. (NASDAQ:AVGO) shares and lowered the price target of the company to $635 from $700. According to the analyst, the “purgatory” state of the semiconductor cycles continues into the Q2 earnings season. Seymore is now looking to reduce revenue, earnings, and price targets by 4%, 10% and 14%, respectively, considering that he is “more actively factoring in accelerating macro/sector headwinds” in his 2023 estimates.
Here is what ClearBridge Investments had to say about Broadcom Inc. (NASDAQ:AVGO) in its Q4 2021 investor letter:
“However, ClearBridge portfolio companies are responding by supporting their workforces and showing resilience in adapting and thriving. Semiconductor companies ClearBridge owns and engages with have been successful in advancing vaccinations in their global supply chains. In Malaysia, for example, Broadcom has taken part in PIKAS, a public-private partnership vaccination program focusing on the workforce in critical manufacturing sectors. By the summer of 2021, Broadcom was able to get over 90% of workers in its Penang factory at least one dose of vaccine, and roughly 73% fully vaccinated. Companies in the program also pay the administration cost for vaccinations including cases where the employee is no longer employed by the company before full immunization of the employee.”
1. Apple Inc. (NASDAQ:AAPL)
Market Cap as of August 8: $2.653 trillion
Apple Inc. (NASDAQ:AAPL) is one of the Big Five firms in the US IT industry. It is one of the most valuable companies in the world and the first one to hit a trillion-dollar market cap. Apple Inc. (NASDAQ:AAPL) is among the first companies to introduce 5G technology in its devices.
Apple Inc. (NASDAQ:AAPL) reported an EPS of $1.20 in Q2 reports, beating the estimates by $0.05. The revenue of $82.9 billion was in line with the estimates. The gross margins were recorded at 43.3%. Furthermore, the free cash flow of the company remained healthy through the quarter at $20.79 billion and an FCF margin of 25.1%. At the end of the quarter, Apple Inc. (NASDAQ:AAPL) reported cash and cash equivalents of $28.86 billion with an inventory of $5.43 billion in the quarter.
On July 29, Morgan Stanley analyst Erik Woodring said that Apple Inc. (NASDAQ:AAPL)’s Q2 results were “better than feared” as supply constraints for Mac and iPad and a decline in wearables were covered up by the iPhone and services segments. Woodring considers Apple Inc. (NASDAQ:AAPL) a Top Pick and maintained an Overweight rating on the company’s shares and kept the price target unchanged at $180.
Here is what Wedgewood Partners had to say about Apple Inc. (NASDAQ:AAPL) in its Q2 2022 investor letter:
“Apple grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.
You can also take a look at 10 Stocks To Buy According to William Von Mueffling’s Cantillon Capital Management and 10 Important Energy Stocks Making Moves After Earnings.
