What happened to 5G?
A few years ago, it was the buzzword du jour. It seemed like every day brought a new story that wowed us with promises of the wondrous advancements it would enable.
But then came artificial intelligence (AI). And like a child’s toy, suddenly overlooked upon the arrival of a newer, shinier toy, 5G drifted out of the conversation.
Let’s put it back into the conversation.
5G’s coming impact is no less groundbreaking than it was a few years ago. And artificial intelligence isn’t some sort of competitor, forcing investors to make a choice.
In fact, in many use cases, AI applications require 5G to perform at their full capacity. These are complementary technologies.
In Tuesday’s Digest, we noted how Luke Lango’s Prometheus AI tool can help investors generate trading profits even in tough market conditions.
While this can be great for boosting your portfolio value, it requires a hands-on approach that doesn’t suit every investor’s temperament.
What if you want zero stress? What if you’re more of a passive investor who prioritizes peace? You’d prefer to invest, then forget about it for five – 10 years.
In that case, you need the support of a long-legs megatrend… something where multi-year demand will be a lock… where you can trust that the businesses at the forefront of the megatrend are all-but-certain to grow their earnings year-after-year thanks to the inevitability of the technology’s adoption.
That’s what 5G offers.
Here’s how our macro investment specialist Eric Fry puts it:
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
5G isn’t slowing anytime soon; in fact, it is careening down a path of inevitability…
According to a study by Intel Corp. (INTC), average monthly traffic per 5G subscriber will increase by almost 700% from now until 2028. Over that time frame, Intel predicts that media and entertainment companies alone could reap more than $1 trillion from 5G-enabled wireless revenue opportunities.
Multiply that opportunity by the dozens more that will emerge in other industries, and suddenly you’re staring in the face of a multitrillion-dollar investment opportunity.
Today, let’s take a break from the Fed, inflation, and interest rates (but don’t miss the 10-year Treasury yield surging to 4.47% as I write Thursday afternoon). Instead, let’s give this forgotten megatrend some much-deserved attention.
For newer Digest readers, Eric is the editor behind Investment Report. As a macro investor, he evaluates markets from a big-picture perspective to identify attractive opportunities and trends. Once something is in his crosshairs, he digs down to find the right, specific investment to play the opportunity.
It’s been a powerful strategy. In his decades in the business, Eric has dug up more 1,000%+ gaining investments than anyone we know of in the newsletter industry – 42. Most investors are lucky to get one.
Returning to 5G, here’s Eric with context for the enormity of the technology’s impact:
5G replaces 4G like an automobile replaces a horse-drawn buggy, or like a personal computer replaces a slide rule.
Compared to 4G, 5G operates up to 100 times faster and accommodates a 10X jump in the number of connections. It also reduces something called “latency” by a factor of 10…
Using today’s 4G networks, it would take about three and a half hours to download all eight seasons of Game of Thrones. A 5G network could do the job in about two minutes.
But Eric makes clear that 5G isn’t only about how fast you can download data. Its enormous technological superiority over 4G means that dozens of new technologies may now emerge and thrive.
Eric points toward a short list of obvious beneficiaries:
As I was researching today’s Digest, I Googled “Where do AI and 5g work together?”
Here’s the top response which comes from TechRepublic:
Healthcare. The healthcare industry can apply 5G and AI to impressive new tech functions.
For example, utilizing 5G networks will enable doctors to perform remote surgeries with the help of AI-powered robots. This will make healthcare more accessible and efficient, especially in remote or underserved areas.
And guess what illustration Eric happens to provide for the symbiotic relationship between 5G and AI?
Remote surgery.
China’s Fujian Medical University conducted the first-ever remote surgery using a 5G connection in 2019.
A doctor who was about 50 kilometers away from the hospital performed the 60-minute surgery by viewing a high-quality live video stream from the 5G network, and then controlled a robot over the network to perform the procedure itself.
That is no small feat – and it’s only one of millions of 5G-enabled possibilities.
Eric explains that for AI to perform its best, low latency and high speed is a must.
To illustrate, he points toward another AI application – the Internet of Things (IoT), which relies heavily on the cloud. To make sure we’re all on the same page, the cloud is just a huge data repository.
International Data Corp. (IDC) expects IoT data volumes to jump nearly 30% a year between now and 2025. Cloud data centers will have to grow memory and storage four- to tenfold to handle the load… and cloud data centers will become the core hub of the 5G digital ecosystem.
Back to Eric for the data/5G/AI connection:
A new generation of cloud-based apps will sprout from that ecosystem. That’s because 5G will unleash the full potential of mobile cloud services that were not feasible with 4G connectivity…
Having AI operate on a 4G network would be like pouring regular-grade, low-octane fuel into a Ferrari’s gas tank and expecting it to perform the same as it does with premium – it’s insulting.
5G is a sprawling ecosystem, offering many ways to invest.
You have your 5G wireless carriers including T-Mobile, Verizon, and AT&T… then there’s the 5G device makers – Apple, Samsung, and Google… there’s also 5G infrastructure companies such as Nokia and Ericsson… and don’t forget your semiconductors and software companies… or even the 5G tower companies.
This is just the beginning. As you can see, it can get overwhelming.
If you want a simple, one-click way to get exposure to the broad trend, you could go the ETF route. For example, there’s the Defiance 5G Next Gen Connectivity ETF (FIVG).
It’s top 10 holdings are:
-
NXP Semiconductors
-
Analog Devices
-
Marvell Technology
-
AMD
-
Nokia
-
Akamai
-
T-Mobile
-
Verizon
-
Ericsson
-
American Tower Corp
You can see how you’re getting exposure to a variety of the 5G niches we covered a moment ago.
Of course, when you choose an ETF, you’re spreading your money over a great deal of terrain. With FIVG specifically, you’re investing in 50 different stocks plus a cash account. That means you’re going to get some underperformers that drag down the returns of your overachievers.
As an alternative, you could use an ETF’s holdings as a menu – more of a starting point for picking a handful of 5G stocks. Just make sure you do your due diligence so that you have peace that the companies you choose are likely to remain leaders for years to come.
If you’d like Eric’s help in picking 5G leaders as an Investment Report subscriber, you can learn more here.
Meanwhile, if you’re more interested in AI plays today, Eric has you covered there too. First, note that some leading AI stocks are also leading 5G stocks – Alphabet is one such example. So, it’s not always an “either/or” binary.
But to give readers more direction about how to invest in AI, Eric just put together his “1,000% AI Blueprint.” You can learn more here.
Returning to 5G specifically, here’s Eric with the final word:
The 5G revolution is just getting underway.
We cannot even begin to guess today what varieties or volumes of 5G-enabled marvels will become the new normal by 2028.
But we can easily guess that the 5G revolution will create many outstanding investment opportunities over the next few years.
Have a good evening,
Jeff Remsburg
The post The Megatrend That Fell Off Your Radar appeared first on InvestorPlace.
