4 stocks benefiting from 5G technology. Investors should take note

BlogAugust 17, 2021

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The commercial rollout of 5G infrastructure in the United States has begun. The leading telecommunications giants are also expanding their network infrastructure to provide next-generation connectivity. The plan will receive substantial government funding to ensure 5G availability across the US. Specifically, the infrastructure investment and jobs bill passed by the senate is expected to provide $65 billion to fund global broadband access goals.

4 stocks benefiting from 5G technology. Investors should take note

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However, a global semiconductor shortage is hindering the rollout of 5G. The problem could also soon be resolved when the federal government is provided with $52 billion in funding for the domestic semiconductor company through the CHIPS for the United States Act. This facilitates the development of 5G infrastructure in the near future.

In this article, we will cover businesses that have a great opportunity to reap the benefits as development policies for 5G infrastructure are implemented. The names mentioned will be Broadcom Inc. (AVGO), QUALCOMM Incorporated (QCOM), NXP Semiconductors NV (NXPI), and Qorvo, Inc. (QRVO).

1.Broadcom Inc. (AVGO)

Broadcom Inc. is an American designer, developer, manufacturer and global supplier of a wide range of semiconductor and infrastructure software products. Broadcom’s product offerings serve the data center, networking, software, broadband, wireless, and storage and industrial markets

4 stocks benefiting from 5G technology. Investors should take note

In the second fiscal quarter, ending May 2, 2021, AVGO’s revenue grew 15% year-over-year to $6.61 billion. This could be due to a 20% increase in semiconductor sales. Non-GAAP net income reached $2.98 billion, up 28.3 percent year-on-year. And non-GAAP EPS jumped 28.8% QoQ to $6.62.

In June, AVGO added the Value Stream Management (VSM) product to its ValueOps software portfolio. They have also expanded their portfolio of photovoltaic platform solutions for data center and cloud networks to meet higher network bandwidth requirements. As companies expand network capacity amid rapid digital transformation, this expansion will boost AVGO’s revenue significantly in the long term.

Analysts expect AVGO’s revenue to grow 11.9% year-on-year to $7.23 billion in the current quarter ending October 2021. Consensus EPS estimate $7.49 dollars for the fiscal fourth quarter represents an 18% increase year-over-year. In addition, the company has an unexpectedly impressive earnings history. AVGO’s shares are up 48.3% over the past year and 11% year-to-date.

2.QUALCOMM Incorporated (QCOM)

Qualcomm Incorporated is an American global semiconductor company that designs and markets wireless telecommunications products and services, headquartered in San Diego, California, USA, with 157 offices worldwide.

4 stocks benefiting from 5G technology. Investors should take note

QCOM’s non-GAAP net sales for the third fiscal quarter (ended June 27, 2021) increased 63% year-on-year to $8 billion. QCOM’s non-AAP net income came in at $2.20 billion, up 124% year over year, and non-GAAP EPS increased 123% year-over-year to $1.92.

On August 5, QCOM submitted an offer to acquire Veoneer, Inc. ( VNE ) for $37 per share in an all-cash transaction. QCOM has outbid competitors Magna International, Inc. ( MGA ) to 18.4%. To this, QCOM CEO Cristiano Amon said, “The proposed acquisition will combine our industry-leading automotive solutions with Veoneer’s driving support assets to deliver a competitive and open ADAS platform for automakers and Tier 1 suppliers at scale.”

In July, Qualcomm partnered with Jacobs and Peachtree Corners to deploy vehicle-to-everything mobility in the Georgia Smart City. This highlights QCOM’s highly efficient products and software designed to support smart cities.

Consensus revenue estimates of $8.86 billion for the fiscal fourth quarter (ending September 2021) show a 36.2% improvement year-over-year. Analysts expect QCOM’s EPS to come in at $2.26, representing a 55.9% year-over-year increase. QCOM has gained 30.7% over the past year to close Friday’s session at $148.64.

3.NXP Semiconductors N.V ( NXPI )

NXP Semiconductors N.V. is a Dutch global semiconductor manufacturer headquartered in Eindhoven, Netherlands. The company has approximately 45,000 employees in more than 35 countries, including 11,200 engineers in 23 countries.

4 stocks benefiting from 5G technology. Investors should take note

NXPI’s revenue grew 42.9% year-on-year to $2.60 billion in the fiscal second quarter ended July 4. Non-GAAP operating income grew 121% year-over-year last to $830 million. Net income was $406 million, up 294.3% year-on-year. And EPS jumped 284.4 percent year-on-year to $1.42, compared with a loss of $0.77 per share in the previous quarter.

On July 20, NXPI signed a secure data exchange agreement with high-tech company MOTER Technologies. The partnership will enable NXPI to develop new innovations in the automotive industry and valuable services.

NXPI partnered with Indian company Jio Platforms Ltd in June to deploy a 5G technology solution and NXPI’s Laverscape multi-core processor family. This partnership is expected to shape Jio’s 5G network rollout in India. As 5G slowly infiltrates the world’s second-largest internet market, NXPI’s partnership with Jio platforms will significantly expand its market reach and revenue.

The Street expects NXPI’s revenue to grow 27.1% year-on-year to $2.85 billion by the end of September 2021. The company’s EPS is expected to grow 68.5% year-on-year. from the same period last year to $2.73 in the current quarter. NXPI has a history of impressive earnings surprises. Shares of NXPI are up 74.9% over the past year and 35.4% year to date.

4.Qorvo, Inc. ( QRVO )

Qorvo is an American semiconductor company that designs, manufactures, and supplies radio-frequency systems for applications that drive wireless and broadband communications, as well as foundry services.

4 stocks benefiting from 5G technology. Investors should take note

In the first fiscal quarter, which ended July 3, QRVO’s revenue grew 41% year-over-year to $1.11 billion. The company’s non-GAAP and EPS net income reported increases of 84.2% and 88.7% year-over-year, respectively, to $322.60. million and $2.83.

On July 28, QRVO’s Qorvo Omnia™ SARS-CoV-2 antigen testing platform was validated in two NIH-funded studies. This marks an important milestone in the development of the Qorvo Omnia diagnostic platform.

In another development on June 21, QRVO introduced a new product line with applications in radar architecture for defense, weather and commercial avionics, sales and distribution. Commercialization of these products will greatly facilitate the development of QRVO in the long run.

QRVO announced that their DW3000 lineup could be compatible with the Apple U1 chip in the same month. This will lead to rapid adoption of QRVO software in mobile, automotive and IoT devices, facilitating new user experiences.

Analysts expect QRVO’s revenue and EPS to grow 18.3% and 24.3% year-on-year, respectively, to $4.75 billion and $12.11 this year. Additionally, the company has surpassed consensus EPS estimates in each of the past four quarters. QRVO grew by 43% year-on-year and 13.3% year-on-year.

Through this, we have listed 4 stocks that are considered to be the most profitable in the context of 5G technology being promoted in the US. Hope you will choose for yourself the most suitable stock to have successful transactions.

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