4 5G Investments to consider in 2023

2021 saw 5G continue to make headlines, both because growing friction between China and much of the West saw a number of countries ban China’s top 5G stock Huawei, and also because 5G infrastructure and adoption ramped up notably last year.

The advances of 2021 did not go unnoticed among people who are still on the fence about whether to invest in 5G, and many are now seizing the moment and searching out the top 5G companies to invest in.

Why invest in 5G?

5G, or the 5th Generation Connectivity Standard, refers to a new level of connectivity which is expected to deliver faster data transfer, lower latency, and improved functionality to link more devices in a single system.

Although you might think 5G just means faster gaming and more powerful smartphones, the impact of 5G could be transformative for every aspect of our lives. 5G’s hyper-swift data sharing and low latency support a massive expansion of Internet of Things (IoT) devices, powerful edge computing, and advanced artificial intelligence (AI) applications like machine learning (ML) and deep learning (DL).

Together, these developments enable futuristic-sounding systems like:

  • Robotic process automation (RPA) for lights-off manufacturing;
  • Smart factories that can detect, diagnose, and even fix incidents;
  • Smart cities with traffic lights and street lighting that adjust according to traffic volume;
  • Round the clock medical monitoring through wearable and embedded devices;
  • Fast remote collaboration for teams working from home;
  • Autonomous self-driving vehicles;
  • ML predictions about weather, disease, and pests to increase crop and livestock yields
  • Unmanned drone missiles, military vehicles, and surveillance equipment

In fact, it’s hard to think of any vertical that wouldn’t be affected by 5G. PWC predicts it could drive a total economic uplift of at least $1.3 trillion in the US alone1, and Qualcomm forecasts the generation of $13.1 trillion dollars of global economic output2. JP Morgan estimates a 16% healthcare cost reduction thanks to remote patient monitoring3, and McKinsey calculates that 5G-powered agritech could add $500 billion onto global GDP by 20304.

Why 2021 drove interest in 5G stocks

2021 saw a number of the aforementioned use cases take big strides forward in their adoption of 5G. The metaverse alone went from being virtually unheard of at the beginning of 2021 to the year’s biggest buzzword, and 5G is the foundation upon which it will be built.

COVID-19 turned fast, reliable internet into a basic human need; sharpened the importance of remote medical monitoring to keep patients out of hospital during periods of peak occupancy; and drove manufacturing companies to adopt 5G to keep plants running on skeleton teams.

With the global 5G fixed wireless access market predicted to have grown at a CAGR of 102.7% to $1,092.26 million by the end of 20215, it’s understandable that many more people are looking for the best 5G stock to buy in 2022.

1. Defiance 5G ETF (FIVG)

Defiance offers an ETF called FIVG, which tracks the rules-based BlueStar 5G Communications Index, following the performance of over 70 US-listed 5G companies’ stock. Investing in an ETF like FIVG means that a single investment is spread across numerous top 5G stocks, helping mitigate exposure to risk.

The 5G stocks covered by FIVG include chipmakers like Xilinx (XLNX) and Nvidia (NVDA); 5G network stocks like Ericsson (ERIC) and Analog Devices Inc (ADI); and 5G cloud infrastructure companies like Alphabet (GOOGL) and Microsoft (MSFT).

FIVG has an expense ratio of 0.30% and a current share price of $42, having climbed 26% since the beginning of 20216.

2. Nokia (NOK)

Since shedding its mobile phone division in 2014, Nokia has steadily reinvented itself as one of the leading innovators of 5G technology and among the best 5G stocks to buy. It released steadily rising revenue reports each quarter, and many hedge funds have invested in the stock7.

In June 2021, Nokia launched its new AirScale Gear8 which is seen as having brought it level with or ahead of the competition, including the 5G giants of Ericsson, Huawei, and Samsung910. Nokia stock has risen over 76% year to date and currently has a stock price of €5.57 ($6.29), placing it among the cheap 5G stocks with a positive outlook for more future growth11.

3. Nvidia (NVDA)

Nvidia produces the semiconductor chips which are a vital part of every 5G device, and it profited well from a year in which demand for chips soared while availability was low. However, Nvidia has seen huge growth for 5 years, with annual revenue skyrocketing from $5 billion in fiscal year 2016 to $16.7 billion in fiscal year 202112.

Nvidia has a high stock price of $300, representing a rise of 128% year to date, but it’s considered to be in a solid position for continued growth13. Nvidia controls over 80% of the gaming GPU market14 and a significant segment of the expanding hyperscale data center market.

4. Alphabet (GOOGL)

Better known as the parent company of Google, Alphabet is selling 5G-related cloud infrastructure services, has a number of 5G projects underway, and has invested in many other smaller 5G stocks and startups. It’s also one of Morgan Stanley’s stock picks for the nascent metaverse15.

Alphabet’s current stock price is $2,933, having risen 69.9% since the beginning of 202116. As a dominant player in many 5G use cases including edge computing, advanced ML, and the metaverse, it’s likely to continue to grow with the market and rank as one of the best 5G stocks.

1 “The global economic impact of 5G” https://www.pwc.com/gx/en/tmt/5g/global-economic-impact-5g.pdf

2 “Everything you need to know about 5G” https://www.qualcomm.com/5g/what-is-5g

3 “The Future of 5G Adoption” May 24, 2021 https://www.jpmorgan.com/insights/research/future-of-5g-adoption

4 “Agriculture’s connected future: How technology can yield new growth” October 9, 2020 https://www.mckinsey.com/industries/agriculture/our-insights/agricultures-connected-future-how-technology-can-yield-new-growth  

5 “Global 5G Fixed Wireless Access Market Report 2021: Market is Expected to Reach $23,108.05 Million in 2025 at a CAGR of 114.5% – Long-term Forecast to 2030 – ResearchAndMarkets.com” December 2, 2021 https://finance.yahoo.com/news/global-5g-fixed-wireless-access-133300013.html

6 Google Stock Price search, accessed December 30, 2021

7 “Nokia’s Comeback Story Is Finally Starting to Solidify” December 7, 2021 https://www.nasdaq.com/articles/nokias-comeback-story-is-finally-starting-to-solidify  “10 5G Stocks to Buy for 2022” December 18, 2021 https://finance.yahoo.com/news/10-5g-stocks-buy-2022-212530615.html

8 “Nokia launches next-generation AirScale 5G portfolio powered by ReefShark technology” June 24, 2021 https://www.nokia.com/about-us/news/releases/2021/06/24/nokia-launches-next-generation-airscale-5g-portfolio-powered-by-reefshark-technology/

9 “Nokia finds its 5G mojo, piling pressure onto Huawei and Ericsson” June 24, 2021 https://www.lightreading.com/5g/nokia-finds-its-5g-mojo-piling-pressure-onto-huawei-and-ericsson/d/d-id/770421

10 “Nokia highlights turnaround with new 5G RAN gear” June 24, 2021  https://www.fiercewireless.com/5g/nokia-highlights-turnaround-new-5g-ran-portfolio

11  Google Stock Price search, accessed December 30, 2021

12 “Nvidia Has Turned $10,000 Into $250,000. Here’s Why It Can Do It Again” August 10, 2021 https://www.fool.com/investing/2021/08/10/nvidia-has-turned-10000-into-250000-heres-why-it-c/

13  Google Stock Price search, accessed December 30, 2021

14 “2 Reasons Why This Is One of the Hottest Growth Stocks to Buy Right Now” June 5, 2021 https://www.fool.com/investing/2021/06/05/2-reasons-why-this-is-one-of-the-hottest-growth-st/

15 “Here Are Morgan Stanley’s Top Stock Picks For Investing In The Metaverse” November 16, 2021 https://www.forbes.com/sites/sergeiklebnikov/2021/11/16/here-are-morgan-stanleys-top-stock-picks-for-investing-in-the-metaverse/?sh=55d843125017

16  Google Stock Price search, accessed December 30, 2021