Chances are high that you’ve been seeing some of the buzz around 5G stocks. Maybe your new smartphone has a 5G option, or you’re curious about ultra-high-speed 5G networks for cloud gaming.
Some people aren’t just excited about experiencing 5G, but also want to take part in the 5G revolution. If you’re wondering how to invest in 5G as a beginner or the top 5G stocks to add to your portfolio, read on.
Why invest in 5G?
For many investors, the biggest reason to buy a 5G companies’ stock is to become part of one of today’s most invigorating disruptive technologies. But 5G stocks hold so much more than that.
5G connections can reach further than 4G/LTE networks and carry stronger, more stable signals, which means they can bring reliable, high-speed internet to the entire world. Chile is using it to bring internet to the Easter Islands; Nigeria announced that it’s on the verge of rolling out its 5G network; and residents of some of the most isolated parts of rural USA finally have internet for the first time.
5G stocks can change life as we know it
Stronger 5G networks can carry more devices, transfer large data files almost instantly, and enable zero-latency communications. These capabilities form the foundations of advanced artificial intelligence (AI) analytics; immersive extended reality (XR) applications; and real time data from smart Internet of Things (IoT) devices.
These are the building blocks for many of today and tomorrow’s most exciting innovations. Some examples include:
- Drone warfare using unmanned aerial vehicles (UAVs) and guided weapons controlled through AR headsets;
- “Lights-out” manufacturing using robotic process automation (RPA) to cut waste, increase productivity, and improve safety;
- Smart cities that use IoT devices and machine learning (ML) analytics to adjust street lighting, traffic light sequencing, and allocate resources more effectively;
- Real time telehealth consultations;
- Round the clock remote health monitoring;
- Smart utilities that detect leaks to reduce waste, and manage energy production and allocation more efficiently;
- ML analysis of meteorological data predicts floods, hurricanes, heatwaves, or cold snaps more accurately to prevent loss of life and property.
- 5G-connected sensors track crop or animal health and monitor weather systems, enabling higher yields without increasing pesticides, fertilizers, or water usage.
Investing in 5G means investing in reality
5G-enabled use cases aren’t just science fiction, so when you choose 5G stocks to buy, you aren’t only investing in a dream. Verizon and T-Mobile are already competing for market share, with ultra-high-speed 5G operational in dozens of cities.
Smart factories are springing up in Japan, Germany, the US, and Ireland, to name just a few, and Canada boasts one of the first smart cities in Kelowna, BC, where LIDAR sensors on traffic lights share data on the 5G network to improve transportation infrastructure.
5G isn’t a monolith
If you’re excited to invest in 5G, you still need to decide which are the best 5G stocks to buy. There are a number of ways to make your choice: some investors target cheap 5G stocks, some look for companies in specific geographies or regions, and others prefer newer startups or longer-established companies.
Another way to understand the different types of 5G companies stock is to consider what aspect of 5G they work in. The main options are:
- Chipmakers
- Infrastructure companies
- 5G network stocks
Nvidia: 5G chipmakers
California-based Nvidia is one of the top 5G companies to invest in in the field of chipmaking, producing microprocessor chips, which are like the brain of every smart device.
The importance of chipmakers like Nvidia was underlined during the pandemic, when disrupted supply chains caused a global chip shortage. Some carmakers had to close factories, because connected cars are very chip-hungry, and smartphone makers like Samsung warned that production might fall.
Nvidia dominates the gaming market with its GPUs, and now it’s also producing other types of microprocessor chip to challenge giants like Intel.
Ericsson: 5G infrastructure
Swedish 5G stock Ericsson focuses on building the infrastructure to carry both private and public 5G networks. It’s one of the most successful 5G infrastructure stocks, with hundreds of agreements with telecommunications providers in scores of countries worldwide.
Ericsson invests a great deal in R&D, to keep improving the speed and range of 5G networks. The company has been recognized as a market leader in global 5G network infrastructure in 2020 by Frost & Sullivan, and as a Leader in Gartner’s 2021 Magic Quadrant for 5G Network Infrastructure for Communications Service Providers.
Nokia: 5G network stock
Nokia used to be a mobile phone company, but since it sold the phone manufacturing side some years ago, it’s made a success of 5G networks. It’s no longer just a meme stock that’s beloved by Reddit traders.
Nokia has deployed its network in countries across the globe, delivering high speed and reliable connectivity to a number of regions and areas. It’s not surprising that Nokia’s earnings reports recently have been strong, and it’s revised upwards its full-year outlook more than once.
FIVG: 5G stocks ETF
Finally, people who struggle to make decisions might prefer a 5G ETF like Defiance’s FIVG. When you invest in an ETF, it’s like you’re spreading your money across a number of the potentially best 5G stocks with a single investment. On top of that, a 5G ETF is easier to manage and track, because it can be traded just like a single stock.
An ETF can help balance your 5G portfolio between chip manufacturers, 5G network stocks, and infrastructure companies, while also helping to mitigate your exposure to risk.
Important Risks
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Investing involves risk. Principal loss is possible. As an ETF, the funds may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. The Funds are not actively managed and would not sell a security due to current or projected under performance unless that security is removed from the Index or is required upon a reconstitution of the Index. A portfolio concentrated in a single industry or country, may be subject to a higher degree of risk. The value of stocks of information technology companies are particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation and competition. The Funds are considered to be non-diversified, so they may invest more of its assets in the securities of a single issuer or a smaller number of issuers. Investments in foreign securities involve certain risks including risk of loss due to foreign currency fluctuations or to political or economic instability. This risk is magnified in emerging markets. Small and mid-cap companies are subject to greater and more unpredictable price changes than securities of large-cap companies.
The possible applications of 5G technologies are only in the exploration stages, and the possibility of returns is uncertain and may not be realized in the near future.
The “BlueStar 5G Communications Index™”, “BFIVG™ Index” (collectively “5G Communications Index”), is the exclusive property and a trademark of BlueStar Global Investors LLC d/b/a BlueStar Indexes® and has been licensed for use for certain purposes by Defiance ETFs LLC. Products based on the Global 5G Communications Index* are not sponsored, endorsed, sold or promoted by BlueStar Global Investors, LLC or BlueStar Indexes®, and BlueStar Global Investors, LLC and BlueStar Indexes® makes no representation regarding the advisability of trading in such product(s).It is not possible to invest directly in an index.
The Defiance Next Gen Connectivity ETF is the first ETF to emphasize securities whose products and services are predominantly tied to the development of 5G networking and communication technologies. The fund does this by tracking The BlueStar 5G Communications Index. The Fund attempts to invest all, or substantially all, of its assets in the component securities that make up the Index.
Diversification does not ensure a profit nor protect against loss in a declining market.
Commissions may be charged on trades.
FIVG is distributed by Foreside Fund Services, LLC.
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