For investors looking for long-term plays in the tech space, 5G is a great place to start.
The rollout of a brand new network that offers superior connectivity is a huge opportunity for a wide variety of tech stocks. There’s no shortage of 5G stocks to buy — from pure plays to huge, diversified names that stand to gain from the new technology, investors have a massive pool of picks to choose from.
Traders looking for stocks to buy in the 5G space should start by considering the industries that will benefit most from its rollout. While some sectors— like chipmakers and wireless carriers— are obvious, others, like gaming offer a more diversified investment opportunity.
InvestorPlace – Stock Market News, Stock Advice & Trading Tips
Here’s a look at seven sectors worth keeping in mind as you make your 5G picks:
-
Components
-
Wireless Carriers
-
Cybersecurity
-
Gaming
-
Media
-
Healthcare
-
Transportation
Investing In 5G Stocks: Components
5G infrastructure is arguably the first place to look if you want to pick up a pure-play on the rollout of the new network. There are a handful of companies building out 5G networks around the world, with Ericsson (NASDAQ:ERIC), Huawei, Nokia (NYSE:NOK), and Samsung being the most popular. It’s too early to declare a top dog in the space, especially considering recent attempts to block China’s Huawei from participating in 5G rollouts in the US and some European countries.
On top of infrastructure firms like those, there are also the chipmakers that facilitate the use of 5G networks. There are several things to consider when it comes to semiconductor stocks— but ultimately they need to strike a balance between bringing out the latest, fastest microchips, and making them cost-effective.
Wireless Carriers
There are ultimately 3 major picks when it comes to wireless carriers offering 5G connectivity— AT&T (NYSE:T), Verizon (NYSE:VZ) and T-Mobile (NASDAQ:TMUS). Each offers a different way to play the rollout, but the winner will likely be the firm that can get a fast 5G connection up, running, and available to the masses, the fastest.
Years down the line, when 5G connectivity has become the norm, the winning firm will be the one that can offer its subscribers something others can’t—like a more reliable connection, lower prices or added benefits.
For now, 5G speeds aren’t quite what they were made out to be, so it could take some time to establish which firm is winning the 5G race.
Cybersecurity
5G is expected to give rise to a host of new connections, but with this new opportunity comes risk as well. Remote working, online banking and even connected appliances offer hackers unlimited opportunities to find a way into the network, and that means cybersecurity will be a top priority for 5G’s retail and enterprise users.
The potential for foul-play was in the spotlight last year when Huawei was accused of spying and subsequently banned from participating in America’s 5G rollout. But as Brookings pointed out at the time, keeping Huawei from America’s 5G infrastructure doesn’t necessarily mean the risk of intrusion is eliminated.
Gaming
Another segment that should see a sizable bump coming from the 5G rollout is gaming. Unlike some of the other industries on this list, gaming doesn’t offer a pure-play 5G stocks, but for investors looking for some diversity that could be a positive.
A Ribbon Research report shows gamers are enthusiastic about the upgraded experience they’ve been promised once 5G is fully up and running. The majority of those surveyed said they’d be willing pay more to have access to the benefit of a faster connection— something game makers can profit from as they roll out new consoles and cloud-based gaming options.
Any game-maker that is planning to utilize 5G will benefit from this shift— Electronic Arts (NASDAQ:EA) is one such firm that’s planning to launch its own cloud-gaming platform called Project Atlas. Microsoft (NASDAQ:MSFT) is another notable player in this space, the firm recently unveiled its own cloud gaming platform.
Media
Another major beneficiary of the 5G revolution is the media and entertainment sector— notably streaming services that will utilize faster connection speeds to deliver a superior user experience. Again, stocks in this segment won’t offer a pure-play on 5G connectivity, but they will likely pivot their business to take advantage of the offering.
There are a ton of options in this arena— from Apple (NASDAQ:AAPL), whose streaming service only recently hit the airwaves. Apple benefits not only from it’s 5G connected devices, but also from its streaming content, potential gaming plays, and its app store. Disney (NYSE:DIS) is another potential beneficiary as the firm continues to grow its streaming service.
Healthcare
The aging population has made healthcare a key investment opportunity, especially as technology continues to advance treatment options. 5G is likely to accelerate that trend as it opens the door to a ton of new possibilities for the medical community.
There are a lot of ways to play this trend as increased bandwidth and speed offer the healthcare industry a host of possibilities. First, there’s the benefits of an ultra-fast connection capable of sending high-quality medical images quickly. On top of that, there’s the added benefit to Telehealth and virtual doctors’ visits.
Perhaps the most exciting aspect is the advancements in virtual reality, which should help with doctor training and could eventually facilitate remote surgeries. Plus there’s the added benefit of artificial intelligence, which could help doctors identify trends they wouldn’t otherwise see and make diagnosing illnesses faster and easier.
Transportation
Finally, there’s the autonomous driving industry, which stands to benefit tremendously from the rollout of 5G connectivity. In fact, many believe that fully autonomous vehicles won’t be possible until a faster network is widespread as it would allow vehicles to communicate with one another.
That’s a huge piece of the driverless car puzzle for a few reasons. First of all, from a safety standpoint, vehicles need to have the ability to interact with each other simply to avoid accidents. But importantly, if they’re able to share the data they gather with each other, the cars will have the opportunity to anticipate and learn from a wider variety of situations.
As with many of the industries on this list, autonomous vehicles aren’t necessarily a 5G pure-play, but it’s an industry that likely won’t get off the ground without the new network in place.
On the date of publication, Laura Hoy did not have (either directly or indirectly) any positions in the securities mentioned in this article
Laura Hoy has a finance degree from Duquesne University and has been writing about financial markets for the past eight years. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN.
More From InvestorPlace
The post How to Invest In 5G Stocks: 7 Sectors to Consider appeared first on InvestorPlace.
