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 Verizon Communications Inc. (NYSE:VZ) 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).
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Verizon Communications Inc. (NYSE:VZ)
Short Interest as % of Shares Outstanding: 1.14%
Number of Hedge Fund Holders: 67
Verizon Communications Inc. (NYSE:VZ) stands out as one of the three major nationwide 5G providers in the U.S. and is a prominent player in the telecommunications sector. The company is well-known for its substantial investments in 5G technology and infrastructure. It offers a range of 5G services, including 5G Ultra Wideband, 5G Home Internet, and 5G Business Internet, among others. It takes the eighth spot on our list of the best 5G stocks to buy according to short sellers.
The 5G Ultra Wideband service is aimed at high-capacity needs and delivers strong performance for demanding applications. Meanwhile, the 5G Home Internet provides fixed wireless high-speed internet with no data caps. For businesses, its 5G Business Internet offers a solution tailored to meet the demands for reliable and secure connectivity.
In Q2, 67 hedge funds had investments in Verizon (NYSE:VZ), with positions worth $1.5 billion. Third Point is the top investor in the company as of Q2 and has a position worth $192.797 million.
Verizon (NYSE:VZ) continues to show resilience and growth potential in a mature and competitive telecommunications market. In the second quarter, the company reported revenue of $32.8 billion, marking a modest increase of 0.6% from the previous year. Despite the overall slow growth in the industry due to near-saturation in U.S. telecom services, it managed to achieve an adjusted EPS of $1.15. This performance highlights the company’s ability to maintain solid results even in a challenging environment.
A significant portion of the company’s revenue comes from its wireless services, which saw a 3.5% increase year-over-year, reaching $19.8 billion. This growth in wireless service revenue reflects the effectiveness of the company’s pricing strategies and the strong demand for its wireless broadband internet offerings.
Verizon’s (NYSE:VZ) ability to attract and retain a large consumer base, while also achieving a 2% increase in revenue from its wireless service, suggests that it is effectively tapping into existing market opportunities despite its large size and established presence.
Additionally, its focus on expanding its consumer segment has proven successful, with revenue in this category rising by 1.5% to $24.9 billion. This indicates that the company is not only sustaining its current customer base but also growing its market share.
On August 12, TD Cowen analyst Gregory Williams reiterated a Buy rating and $51.00 price target on Verizon (NYSE:VZ). Williams’ positive outlook is supported by insights gained from an investor meeting with the company’s Chief Network Officer Lynn Cox and the head of investor relations, Brady Connor. The analyst highlighted that the company’s C-band spectrum, important for advanced 5G capabilities, is expected to be largely deployed by the end of 2025. Additionally, the anticipated AI-driven enhancements to the network are expected to provide a boost, positioning it for future growth.
Overall VZ ranks 8th in our list of the best 5G stocks to buy according to short sellers. While we acknowledge the potential of VZ 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.
