We recently compiled a list of the 10 Best 5G Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where T-Mobile US, Inc. (NASDAQ:TMUS) stands against the other 5G stocks.
5G, or fifth-generation wireless technology, is the latest evolution in mobile networks, which is designed to significantly improve speed, reduce latency, and enhance the capacity and connectivity of mobile devices. A Market Research Future report estimates that in 2024, the 5G market is projected to be worth $15.03 billion, and by 2032, it could reach $229.41 billion. This rapid increase represents a compound annual growth rate (CAGR) of 40.60% during the forecast period. According to some experts, 5G is one of the most important trends in technology along with artificial intelligence (AI).
5G and AI Could be Catalysts of Global Digital Transformation
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.
When asked about the rivalry between countries like the U.S. and China in AI and 5G, Mats said that such competition is insignificant. He said that from his experience on the GSMA board, which represents the 25 largest mobile operators globally, the focus is on creating common standards and specifications rather than competing.
He talked about the difficulties of the 2G and 3G eras when different technologies created challenges for global connectivity. The shift to a unified 4G standard was a pivotal moment that laid the foundation for the digital economy.
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.
Our Methodology
For this article, we used stock screeners and ETFs to identify companies involved in the 5G market. We then selected 10 stocks with the smallest short interest and listed them in descending order of their short interest. We also mentioned 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).
A customer checking out their new device at a T-Mobile store, illustrating the convenience and accessibility of retail stores.
T-Mobile US, Inc. (NASDAQ:TMUS)
Short Interest as % of Shares Outstanding: 1.37%
Number of Hedge Fund Holders: 64
T-Mobile US, Inc. (NASDAQ:TMUS), originally launched as Voicestream Wireless in 1994, has grown into a major player in the wireless industry. With its commitment to delivering high-quality 5G services, the company offers a range of products including unlimited 5G plans, home internet, and fixed wireless access solutions. It is among our best 5G stocks to buy.
It has aggressively expanded its 5G network, providing customers with both Extended Range 5G and Ultra Capacity 5G. This expansion is supported by a broad spectrum portfolio that includes low-band, mid-band, and millimeter-wave frequencies, which are important for delivering fast, reliable service.
The company’s 2020 acquisition of Sprint has significantly strengthened its position in the industry, which allowed it to scale its operations and better its network infrastructure. Its investment in spectrum management and network quality is evident, as it claims its network offers download speeds up to three times faster than its competitors and provides nearly six times the 5G coverage compared to the closest rival.
In the second quarter, T-Mobile (NASDAQ:TMUS) reported an EPS of $2.49 and total revenue of $19.77 billion. In the quarter, service revenues grew to $16.43 billion, reflecting a 4.4% increase year-over-year, while postpaid service revenues saw a 6.9% rise to $12.9 billion. The company achieved record-high postpaid phone net additions of 301,000, bringing its total customer connections to over 100 million. This strong performance is further highlighted by a record-low upgrade rate, which shows high customer satisfaction driven by its robust 5G network.
Additionally, the company made headlines in July with a joint venture with KKR to acquire fiber service provider Metronet for $4.9 billion. This move marks the company’s expansion into fiber internet, complementing its leading 5G services and strengthening its overall market position.
The company is optimistic for the full year, projecting total postpaid customer net additions between 5.4 million and 5.7 million for the year and expecting core adjusted EBITDA to fall between $31.5 billion and $31.8 billion. These figures reflect its strong market presence and its ability to capture growth opportunities in both wireless and fiber internet services.
In the second quarter, 64 hedge funds held positions in T-Mobile (NASDAQ:TMUS) and their stakes amounted to $2.62 billion. As of June 30, Berkshire Hathaway is the most dominant shareholder in the company and has a position worth $823.113 million.
Overall TMUS ranks 10th in our list of the best 5G stocks to buy according to short sellers. While we acknowledge the potential of TMUS as an investment, 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 a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.