6th Feb 2019
Five semiconductor companies are in a prime position to benefit from the rollout of 5G, the fifth generation of wireless communication that telecom companies are racing to implement, CNBC’s Jim Cramer said Wednesday.
“If you’re a semiconductor company with 5G exposure, this is your moment,” he said after Skyworks Solutions, an Apple supplier that fits that description, surged over 12 percent intraday after delivering its quarterly earnings results.
Skyworks’ surge was so strong that it lifted shares of other chipmakers involved in 5G, including Intel, Qualcomm, Broadcom, and Xilinx, all of which stand to benefit from the rise of 5G, Cramer said on “Mad Money.”
And while he preferred the stock of Skyworks to its peers because of its low price tag and the company’s focus on 5G, he said investors “can make the case for all five.”
Still, Cramer began with his case for Skyworks. While he didn’t find its earnings results very impressive, he liked that the company finally managed to change the narrative around its 5G prospects. The CEO repeatedly cited “the shift to 5G” as a “tremendous catalyst” thanks to all the new connected devices that will need Skyworks’ chips.
“No wonder Goldman Sachs upgraded the stock today, predicting that the business will bottom in the first quarter and arguing that the risk-reward here is too attractive to ignore. That’s a gutsy call. Makes sense to me,” the “Mad Money” host said. “Even after today’s run, get this: Skyworks sells for less than 12 times next year’s earnings [estimates], and I think there could be a long runway here.”
People might think of Intel as a personal computer business, but the company’s multi-year diversification efforts have made it a player in areas like autonomous driving, the internet of things and communications, Cramer said, citing his recent interview with now-permanent CEO Bob Swan in which he spoke about Intel’s 5G opportunity.
“Now, Intel’s had some real execution issues of late — their latest results and guidance were unambiguously bad, although the stock has now rebounded back to where it was trading before the quarter because investors figured the industry is about to bottom, ” Cramer explained. “With its 2.5 percent yield [and a] new CEO who is very energized, I think you could do a lot worse than Intel as a slow-and-steady way to play the 5G buildout.”