In this article, we discuss the 10 best 5G stocks to buy according to short sellers. We also discuss an expert’s opinion of the future of 5G technology and its interconnectedness with AI.
5G, or fifth-generation wireless technology, is the latest evolution in mobile networks, which is designed to significantly improve speed, reduce latency, and enhance the capacity and connectivity of mobile devices. A Market Research Future report estimates that in 2024, the 5G market is projected to be worth $15.03 billion, and by 2032, it could reach $229.41 billion. This rapid increase represents a compound annual growth rate (CAGR) of 40.60% during the forecast period. According to some experts, 5G is one of the most important trends in technology along with artificial intelligence (AI).
5G and AI Could be Catalysts of Global Digital Transformation
In a CNBC interview at the Mobile World Congress Shanghai on June 26, director-general of the GSM Association, Mats Granryd highlighted the deep connection between 5G and AI and suggested that their mutual rise is not accidental. He said that “AI feeds off 5G and 5G feeds off AI.” This is especially evident in China, where the development of standalone 5G networks is well advanced and discussions are already shifting toward 5G Advanced (5.5G). While some countries lag, like the Philippines, Mats pointed out that this dynamic between 5G and AI is most prominent in regions with widespread 5G coverage.
When asked about the rivalry between countries like the U.S. and China in AI and 5G, Mats said that such competition is insignificant. He said that from his experience on the GSMA board, which represents the 25 largest mobile operators globally, the focus is on creating common standards and specifications rather than competing.
He talked about the difficulties of the 2G and 3G eras when different technologies created challenges for global connectivity. The shift to a unified 4G standard was a pivotal moment that laid the foundation for the digital economy.
Mats believes that 5G will follow a similar path to become a common platform worldwide, which will also extend to AI. While some regions may advance faster than others initially, he showed confidence in the fact that everyone will eventually catch up and benefit from the integration of AI with 5G.
With that, we discuss the 10 best 5G stocks to buy according to short sellers.
10 Best 5G Stocks To Buy According to Short Sellers
Our Methodology
For this article, we used stock screeners and ETFs to identify companies involved in the 5G market. We then selected 10 stocks with the smallest short interest and listed them in descending order of their short interest. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best 5G Stocks To Buy According to Short Sellers
10. T-Mobile US, Inc. (NASDAQ:TMUS)
Short Interest as % of Shares Outstanding: 1.37%
Number of Hedge Fund Holders: 64
T-Mobile US, Inc. (NASDAQ:TMUS), originally launched as Voicestream Wireless in 1994, has grown into a major player in the wireless industry. With its commitment to delivering high-quality 5G services, the company offers a range of products including unlimited 5G plans, home internet, and fixed wireless access solutions. It is among our best 5G stocks to buy.
It has aggressively expanded its 5G network, providing customers with both Extended Range 5G and Ultra Capacity 5G. This expansion is supported by a broad spectrum portfolio that includes low-band, mid-band, and millimeter-wave frequencies, which are important for delivering fast, reliable service.
The company’s 2020 acquisition of Sprint has significantly strengthened its position in the industry, which allowed it to scale its operations and better its network infrastructure. Its investment in spectrum management and network quality is evident, as it claims its network offers download speeds up to three times faster than its competitors and provides nearly six times the 5G coverage compared to the closest rival.
In the second quarter, T-Mobile (NASDAQ:TMUS) reported an EPS of $2.49 and total revenue of $19.77 billion. In the quarter, service revenues grew to $16.43 billion, reflecting a 4.4% increase year-over-year, while postpaid service revenues saw a 6.9% rise to $12.9 billion. The company achieved record-high postpaid phone net additions of 301,000, bringing its total customer connections to over 100 million. This strong performance is further highlighted by a record-low upgrade rate, which shows high customer satisfaction driven by its robust 5G network.
Additionally, the company made headlines in July with a joint venture with KKR to acquire fiber service provider Metronet for $4.9 billion. This move marks the company’s expansion into fiber internet, complementing its leading 5G services and strengthening its overall market position.
The company is optimistic for the full year, projecting total postpaid customer net additions between 5.4 million and 5.7 million for the year and expecting core adjusted EBITDA to fall between $31.5 billion and $31.8 billion. These figures reflect its strong market presence and its ability to capture growth opportunities in both wireless and fiber internet services.
In the second quarter, 64 hedge funds held positions in T-Mobile (NASDAQ:TMUS) and their stakes amounted to $2.62 billion. As of June 30, Berkshire Hathaway is the most dominant shareholder in the company and has a position worth $823.113 million.
9. Cisco Systems, Inc. (NASDAQ:CSCO)
Short Interest as % of Shares Outstanding: 1.30%
Number of Hedge Fund Holders: 61
Cisco Systems, Inc. (NASDAQ:CSCO) is an American multinational technology conglomerate headquartered in California. The company started its journey in 1984 and has been a leading innovator in digital communications. It gained recognition after developing multiprotocol routers that facilitated communication across different networks. It is one of the best 5G stocks to buy according to short sellers.
61 hedge funds had stakes worth $1.6 billion in Cisco (NASDAQ:CSCO) in the second quarter. As of June 30, Harris Associates holds 10.4 million shares of the company, valued at $496.382 million, making it the company’s largest shareholder.
Cisco’s (NASDAQ:CSCO) portfolio includes a broad range of networking hardware, software, and services, specializing in areas such as the Internet of Things (IoT), domain security, videoconferencing, and energy management. Some of its products include Webex for video conferencing, OpenDNS for online security, and the Silicon One chip, which is designed to handle huge amounts of data.
Its approach to 5G is centered around its Cisco ONE architecture, which is designed for cloud and software-based management. This setup connects both business and service provider networks, which makes it easy for different types of connections to work together smoothly. This includes seamless roaming between 5G cellular networks and Wi-Fi, particularly with the latest Wi-Fi 6 technology. Wi-Fi 6 shares several features with 5G, such as improved speed and efficiency.
Additionally, Cisco Private 5G is a managed service that gives businesses all the benefits of a private 5G network without the high upfront costs or the hassle of managing it themselves. It provides fast and reliable internet, along with features like tracking and managing devices and applications for better security. Businesses can use Cisco Private 5G to boost their digital transformation, improve operations, and support various applications like robotics, asset tracking, and remote broadcasting.
8. Verizon Communications Inc. (NYSE:VZ)
Short Interest as % of Shares Outstanding: 1.14%
Number of Hedge Fund Holders: 67
Verizon Communications Inc. (NYSE:VZ) stands out as one of the three major nationwide 5G providers in the U.S. and is a prominent player in the telecommunications sector. The company is well-known for its substantial investments in 5G technology and infrastructure. It offers a range of 5G services, including 5G Ultra Wideband, 5G Home Internet, and 5G Business Internet, among others. It takes the eighth spot on our list of the best 5G stocks to buy according to short sellers.
The 5G Ultra Wideband service is aimed at high-capacity needs and delivers strong performance for demanding applications. Meanwhile, the 5G Home Internet provides fixed wireless high-speed internet with no data caps. For businesses, its 5G Business Internet offers a solution tailored to meet the demands for reliable and secure connectivity.
In Q2, 67 hedge funds had investments in Verizon (NYSE:VZ), with positions worth $1.5 billion. Third Point is the top investor in the company as of Q2 and has a position worth $192.797 million.
Verizon (NYSE:VZ) continues to show resilience and growth potential in a mature and competitive telecommunications market. In the second quarter, the company reported revenue of $32.8 billion, marking a modest increase of 0.6% from the previous year. Despite the overall slow growth in the industry due to near-saturation in U.S. telecom services, it managed to achieve an adjusted EPS of $1.15. This performance highlights the company’s ability to maintain solid results even in a challenging environment.
A significant portion of the company’s revenue comes from its wireless services, which saw a 3.5% increase year-over-year, reaching $19.8 billion. This growth in wireless service revenue reflects the effectiveness of the company’s pricing strategies and the strong demand for its wireless broadband internet offerings.
Verizon’s (NYSE:VZ) ability to attract and retain a large consumer base, while also achieving a 2% increase in revenue from its wireless service, suggests that it is effectively tapping into existing market opportunities despite its large size and established presence.
Additionally, its focus on expanding its consumer segment has proven successful, with revenue in this category rising by 1.5% to $24.9 billion. This indicates that the company is not only sustaining its current customer base but also growing its market share.
On August 12, TD Cowen analyst Gregory Williams reiterated a Buy rating and $51.00 price target on Verizon (NYSE:VZ). Williams’ positive outlook is supported by insights gained from an investor meeting with the company’s Chief Network Officer Lynn Cox and the head of investor relations, Brady Connor. The analyst highlighted that the company’s C-band spectrum, important for advanced 5G capabilities, is expected to be largely deployed by the end of 2025. Additionally, the anticipated AI-driven enhancements to the network are expected to provide a boost, positioning it for future growth.