Communication Technology: How to Invest in 5G Networks

What is 5G and How Does 5G Work?

There are many advantages of 5G, the fifth generation of mobile technology, which has traveled light-years beyond 4G to deliver exponentially higher speeds—as well as growth possibilities for investors.

While investing in an emerging industry like 5G has its share of risk, investors can explore a spectrum of investments, from telecom companies like Verizon (VZ) to mutual funds and ETFs that include exposure to 5G companies around the world.

Over the next five years, half of all worldwide data is expected to be generated not by people, but computerized, connected devices. 5G is making that possible. From 2G to 3G to 4G and now 5G, each new generation of mobile technology has one-upped communication technologies.

Each has utilized higher radio frequencies and cutting-edge advancements to increase the speed and capability of cellular data, and boost the range at which cell phones can get a reliable signal. From wireless to broadband to fiber optics, widespread release of 5G technology is expected to give us the power to immediately access the information we need from anywhere in the world.

What makes this technology a game changer and one of the many benefits of 5G is its ultra-low latency rate, or how long it takes to send data from one point to another. Its latency is less than 10 milliseconds, an astonishing 5,000 percent reduction of 4G’s rate—and this opens up applications for real-time interactions even when people or devices are thousands of miles away.

Because of the low latency rate, the adoption of 5G signals more than the future of mobile phones. Sectors like manufacturing have geared up automation using 5G. Upgraded streaming capabilities are supercharging cloud-based applications, from the workplace to gaming.

Industries are using 5G to tap into the capabilities of the Internet of Things, connecting autonomous vehicles as well as smart cities that can access instant data on traffic and environmental conditions. Health care also gets an assist from 5G, with telemedicine reaping lifesaving benefits, like medical professionals accessing real-time data about their patients, or even completing surgical procedures remotely, without delays.

Although the 5G market value was more than $10 billion in 2021, the 5G technology market is anticipated to surge over the next seven years, reaching over $3 trillion by 2030. What’s driving this growth? Demand for faster connections and high-speed data, as well as digitalization and technology advancements—especially as more and more companies and consumers tune into cloud-based services. 5G promises growth, and it’s expected to deliver, to businesses, consumers, and investors.

Why Invest in 5G?

Exponentially faster than the previous generation of mobile technology, 5G also promises exponentially more opportunities for investors eyeing 5G stocks. Like many emerging industries, 5G technology is being pioneered by a handful of standout companies, both large incumbents and fast-growing startups.

Investors looking into 5G investments can follow earnings reports for telecommunications providers who are spending big to connect homes and mobile phones with 5G wireless. Investors looking to diversify their holdings may see opportunities in overseas 5G markets, such as South Korea and China, leading countries in 5G network coverage, or India, where nearly 10 percent of its billion wireless subscribers already use devices that are 5G capable and will not need to purchase new smartphones.

And it’s still early—investors who get in on 5G now will have far more upside to ride up than those who wait until the technology is fully rolled out and in broad use.

You don't need to be an expert to invest.

5G Trends to Watch:

Telecommunications - Telecom giants like T-Mobile (TMUS), AT&T (T), and Verizon (VZ), as well as telecom network equipment companies, are spending big on 5G to connect wireless homes and business broadband subscribers.
Mobile Infrastructure - Smartphone companies like Apple and Samsung as well as chipmakers are leveraging 5G to expand the reach of their products, with more towers and micro-towers supporting this push.
Cloud Computing and Edge Computing - Companies adopting edge computing and cloud computing continue to drive growth in 5G, from household names like Amazon (AMZN), Microsoft (MSFT), and Alphabet’s Google (GOOGL) to startups.
Virtual Reality (VR) and Augmented Reality (AR) - 5G’s speed and improved connectivity will boost VR and AR applications in entertainment, education, and the workplace.
Robotics and Autonomous Cars - With 5G’s ultra-low latency, real-time interactions between devices that may be thousands of miles away means extraordinary possibilities for self-driving vehicles, logistics, and manufacturing.
Cybersecurity - With hospitals, factories, refineries, power grids and more wiring for 5G, securing data and public safety will be top of mind.
Internet of Everything - Businesses optimizing 5G capabilities for Internet of Everything applications fuel even more advancements, from automated manufacturing to tech companies putting smart homes on the market.

There Are Still Risks to Investing in 5G:

Limited Coverage - Widespread 5G coverage has not yet replaced 4G LTE and WiFi, in part because of regulatory hurdles and delays.
Supply Chain Challenges - Manufacturing of essential components like semiconductors can get snarled in delayed supply chains or disrupted by challenges facing raw material extraction.
Expensive to Adopt - For many providers, investing in 5G frequency access is expensive, which may limit the number of providers that can compete in this market.
Security - Securing networks and software components efficiently is essential to protect data, public health, and services.

5G adoption is expected to take off, but the timeline isn’t set, and which companies will take the lead is still up for grabs. Still, 5G’s explosive potential is why this up-and-coming form of mobile internet is a key area for investors who are interested in the latest technology.

How to Invest in 5G

Investing in the sector via an ETF or mutual fund is a good way to counter the risks of a growth industry like 5G while still gaining exposure to this high-potential segment. As this technology continues to make many of the latest advancements in other tech industries possible, it could be a perfect time to get in on all the action, before it's too late. Magnifi can help you get started.

A search using your AI investing assistant, Magnifi, will indicate there are a number of ways for investors to tap into 5G, from emerging markets to industries that are transforming with 5G capabilities:

References:

Wheeler, Tom, and David Simpson, “The digital future requires making 5G secure,” December 12, 2022, Techtank, Brookings, link
Stone, Mark, “What is 5G? A beginner’s guide,” January 14, 2021, link
5G Technology Market Size and Forecast, accessed January 3, 2023, VerifiedMarketResearch.com, link
Krause, Reinhardt, “5G Stocks to Buy and Watch as Cloud Computing Plays Bigger Role,” January 3, 2023, link; Khatri, Hardik, “India already has a large addressable market for 5G, September 7, 2022, OpenSignal.com, link