We recently published a list of 10 Worst 5G Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where Skyworks Solutions, Inc. (NASDAQ:SWKS) stands against other worst 5G stocks to buy according to short sellers.
As we move a quarter of the way into the 21st century, the world is paving the way for new technologies to make human lives easier and more advanced. Out of those, 5G and artificial intelligence (AI) are two of the century’s most important innovations.
We discussed the correlation between the two of them in our article about the best 5g stocks to buy according to short sellers. Here is an excerpt from the article:
“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…
…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.”
The Outlook For 5G Industry
We also previously discussed the Market Research Future report which expects the 5G market to reach $229.41 billion by 2032, growing at a compound annual growth rate (CAGR) of 40.60% between 2024 and 2032.
According to a 5G Americas report, the wireless telecommunications sector continued to expand in the first quarter of 2024, driven by the widespread growth of 5G technology. Global 5G connections reached nearly two billion. North America’s leading adoption accounted for 32% of all 5G connections and added 22 million new connections, totaling 220 million. Latin America also experienced growth, with 8 million new LTE connections and 9 million 5G connections.
For the future, the 5G Americas forecast suggests that global 5G connections will reach 7.7 billion by 2028, with North America projected to have 700 million. The Internet of Things (IoT) is expected to further drive 5G adoption, with global IoT subscriptions expected to grow from 3.3 billion to 5 billion by 2028.
The Evolution of Mobile Networks with 5G Advanced and 6G
According to a March report by CNBC, telecom executives discussed plans for 5.5G or 5G Advanced at the Mobile World Congress in Barcelona, even as 5G is still being rolled out. The new stage of mobile technology is expected to enable advanced applications like mixed reality headsets, autonomous vehicles, and smart factories, which were initially promised with 5G.
The 5.5G technology will improve network capabilities by increasing data speeds and enhancing connectivity. It will also use AI to optimize networks and reduce power consumption. Huawei expects that 5.5G will begin commercial deployments by 2024, with the potential for much faster download speeds. The focus now is on improving 5G’s commercial relevance and paving the way for 6G in the future.
Moreover, a team of scientists, led by Professor Withawat Withayachumnankul from the University of Adelaide, has created a new polarisation multiplexer that could greatly improve 6G communications. The device works at terahertz frequencies, which are much faster than current wireless systems. It can send multiple data streams at the same time over the same frequency, effectively doubling the data capacity.
The multiplexer is built on a silicon base and has been successfully tested and reduces data loss compared to existing technology. The innovation could lead to faster, more reliable wireless networks and would benefit areas like telecommunications, video streaming, and future 6G mobile networks. The team expects it to drive more research and become available in commercial products within the next decade.
Our Methodology
To select the 10 worst 5G stocks according to short sellers, we used ETFs and screeners to identify over 40 stocks that have significant involvement in the 5G industry. Next, we narrowed our list to 10 stocks with the highest short interest. Finally, these stocks were ranked in ascending order of their short interest.
We also added 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).
A technician using a specialized tool to mount a wireless analog system on chip.
Skyworks Solutions, Inc. (NASDAQ:SWKS)
Short Interest as % of Shares Outstanding: 4.17%
Number of Hedge Fund Holders: 24
Skyworks Solutions, Inc. (NASDAQ:SWKS) is a California-based semiconductor company. The company was founded with a focus on high-performance analog semiconductors and it designs and manufactures a range of products that cater to various sectors including mobile devices, automotive, and industrial applications.
The company’s offerings include low-noise and power amplifiers, RF switches, and power management chips. Over the years, it has expanded its product portfolio and market reach through strategic acquisitions, including notable purchases such as Avnera and the Infrastructure & Automotive business from Silicon Labs.
In Q2, 24 hedge funds held the company shares, valued at $826.625 million. As of June 30, Pzena Investment Management is Skyworks’ (NASDAQ:SWKS) largest shareholder with 4.09 million shares, worth $435.943 million.
The company is leading the development of essential technologies for 5G connectivity. Its SKY5 platform provides advanced solutions that drive high-speed, reliable 5G performance across both infrastructure and user equipment.
The platform includes Sky5 Ultra, which offers a compact, high-efficiency design for top-tier 5G devices, and Sky5 LiTE, a streamlined solution aimed at mass-market 5G applications. The products support a wide range of bandwidths and are engineered to optimize performance, battery life, and network speed, which facilitates rapid and effective 5G deployment.
Skyworks (NASDAQ:SWKS) is one of the worst 5G stocks to buy according to short sellers with a short interest of 4.17%. In addition, analysts also seem a little pessimistic about the stock as only 6 out of 29 analysts that have covered the stock have a Buy or better rating on it.
On July 31, Susquehanna analyst Christopher Rolland maintained a Hold rating on the stock due to several factors including potential revenue loss from a significant Apple customer and a decline due to Qualcomm socket replacement. Moreover, short-term profitability may be impacted by the company’s investment plans for 2025.
The company’s growth in the Broad Markets segment is below expectations, and while gross margins are expected to be slightly lower, cost reductions may aid margin improvement. The latest Hold rating for the company was given by Benchmark Co. analyst Cody Acree on September 10.
Overall, SWKS ranks 7th on our list of 10 worst 5G stocks to buy according to short sellers. While we acknowledge the potential of SWKS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SWKS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
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