In this article, we’ll discuss short sellers’ top 10 5G stocks to buy, as well as what experts say about the future of 5G technology and its interconnectivity with AI.
5G (fifth generation wireless technology) is the latest evolution of mobile networks, designed to significantly increase speeds, reduce latency, and enhance capacity and connectivity for mobile devices. A report by Market Research Future predicts that the 5G market will be worth $15.03 billion in 2024 and is expected to reach $229.41 billion by 2032. 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, alongside artificial intelligence (AI).
5G and AI could be catalysts for global digital transformation
In an interview with CNBC at the Mobile World Congress in Shanghai on June 26, Mats Granryd, secretary general of the GSM Association, highlighted the deep connection between 5G and AI, suggesting that the mutual rise of the two is no coincidence. “AI feeds on 5G, and 5G feeds on AI,” he said. This is especially evident in China, where the country is well advanced in the development of standalone 5G networks and discussions are already moving to 5G Advanced (5.5G). While some countries, such as the Philippines, are lagging behind, Mats noted that this dynamic between 5G and AI is most evident in regions where 5G is widely deployed.
When asked about competition between countries like the US and China in AI and 5G, Matz said such competition is inconsequential. He said his experience on the GSMA board, which represents the world’s 25 largest mobile operators, has shown that the focus is on creating common standards and specifications rather than competition.
He spoke of the difficulties of the 2G and 3G era, where different technologies posed challenges to global connectivity, and the transition to a unified 4G standard was a pivotal moment in laying the foundations for the digital economy.
Matz believes 5G will follow a similar path, becoming a global platform that will then spread to AI. While some regions may advance faster than others initially, he is confident that everyone will eventually catch up and benefit from the integration of AI and 5G.
So, Short sellers pick the 10 best 5G stocks to buy.
Short sellers pick the 10 best 5G stocks
Our Methodology
In this article, we used stock screeners and ETFs to identify companies involved in the 5G market. We then selected the 10 stocks with the least short interest and listed them in descending order of short interest. We also included hedge fund sentiment on each stock, taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in hedge fund concentrated stocks? The reason is simple: our research shows that you can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small and large stocks each quarter, and has returned 275% since May 2014, beating the benchmark by 150 percentage points (more details here).
Short sellers pick the 10 best 5G stocks
10. T-Mobile US (NASDAQ:TMUS)
Short interest ratio to shares issued: 1.37%
Number of hedge fund holders: 64
T-Mobile US, Inc. (NASDAQ:TMUS) was founded in 1994 as Voicestream Wireless and has grown into a major player in the wireless industry. Focused on delivering high-quality 5G services, the company offers a variety of products, including unlimited 5G plans, home internet, and fixed wireless access solutions. It’s one of our recommended 5G stocks.
The company is aggressively expanding its 5G network, offering customers both Extended Range 5G and Ultra Capacity 5G. This expansion is supported by a broad spectrum portfolio that includes low-band, mid-band and mmWave frequencies, which are critical to delivering fast and reliable services.
The company acquired Sprint in 2020, significantly strengthening its position in the industry, allowing it to expand its operations and improve its network infrastructure. The company’s investments in spectrum management and network quality are evident, as the company claims its network offers up to three times faster download speeds than competitors and almost six times the 5G coverage compared to its nearest rival.
T-Mobile (NASDAQ:TMUS) reported second quarter EPS of $2.49 on total revenue of $19.77 billion. Service revenue grew 4.4% year over year to $16.43 billion during the quarter, while postpaid service revenue increased 6.9% to $12.9 billion. The company achieved a record high of 301,000 postpaid phone net additions and surpassed 100 million total customer connections. This strong performance was further highlighted by record low upgrade rates, indicating high customer satisfaction driven by a robust 5G network.
Additionally, the company made headlines in July when it acquired fiber optic service provider MetroNet in a joint venture with KKR for $4.9 billion, a move that marks the company’s foray into fiber optic internet, complementing its flagship 5G services and strengthening its overall market position.
The company is optimistic for the full year, forecasting postpaid customer net additions of 5.4 million to 5.7 million for the full year and core adjusted EBITDA of $31.5 billion to $31.8 billion. These figures reflect the company’s strong market presence and ability to capture growth opportunities in both its wireless and fiber optic internet services.
During the second quarter, 64 hedge funds held shares of T-Mobile (NASDAQ:TMUS), totaling $2.62 billion in their holdings. As of June 30, Berkshire Hathaway was the company’s largest shareholder, with its holdings worth $823.113 million.
9. Cisco Systems (NASDAQ:Central Intelligence Agency)
Short interest ratio to shares issued: 1.30%
Number of hedge fund holders: 61
Cisco Systems, Inc. (NASDAQ:CSCO) is an American multinational technology conglomerate headquartered in California. Founded in 1984, the company has been a pioneer in digital communications. It gained recognition for developing multi-protocol routers that facilitate communication between different networks. According to short sellers, the company is one of the best 5G stocks to buy.
During the second quarter, 61 hedge funds held shares worth $1.6 billion in Cisco Systems (NASDAQ:CSCO). As of June 30, Harris Associates held 10.4 million shares of the company’s stock, valued at $496,382,000, making it the company’s largest shareholder.
Cisco’s (NASDAQ:CSCO) portfolio includes a wide range of networking hardware, software, and services specializing in areas such as the Internet of Things (IoT), domain security, video conferencing, and energy management. The company’s products include Webex for video conferencing, OpenDNS for online security, and Silicon One chips designed to handle large amounts of data.
The company’s approach to 5G is centered around the Cisco ONE architecture, designed for cloud and software-based management. This setup connects both enterprise and service provider networks and allows different types of connections to work smoothly together. This includes seamless roaming between 5G cellular networks and Wi-Fi, especially with the latest Wi-Fi 6 technology, which shares some 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 and hassle of managing it yourself. It provides fast and reliable internet, plus features like device and application tracking and management, and enhanced security. Businesses can use Cisco Private 5G to accelerate their digital transformation, improve operations, and support a variety of applications such as robotics, asset tracking, and remote broadcasting.
8. Verizon Communications (NYSE:VZ)
Short interest ratio to shares issued: 1.14%
Number of hedge fund holders: 67
Verizon Communications (NYSE:VZ) stands out as one of the top three 5G providers in the United States and is a major player in the communications sector. The company is well known for its heavy investments in 5G technology and infrastructure. It offers a variety of 5G services, including 5G Ultra Wideband, 5G Home Internet, and 5G Business Internet. It ranks 8th on short sellers’ list of 5G stocks to buy.
5G Ultra Wideband services target high-capacity needs and deliver powerful performance for demanding applications, while 5G Home Internet offers fixed wireless high-speed Internet with no data caps, and for businesses, 5G Business Internet offers tailored solutions to meet the demand for reliable and secure connectivity.
67 hedge funds had investments in Verizon (NYSE:VZ) during the second quarter, with positions worth $1.5 billion. The largest investor in the company as of the second quarter was Third Point, with a position worth $192.797 million.
Verizon (NYSE:VZ) continues to demonstrate resilience and growth potential in a mature and competitive communications market. The company reported revenue of $32.8 billion in the second quarter, a modest increase of 0.6% year over year. Despite overall industry growth slowing due to near saturation of U.S. communications services, the company delivered adjusted EPS of $1.15. This performance highlights the company’s ability to maintain solid performance in a challenging environment.
The majority of the company’s revenues came from wireless services, which increased 3.5% year over year to $19.8 billion. This growth in wireless services revenues reflects the effectiveness of the company’s pricing strategy and strong demand for wireless broadband Internet services.
Verizon (NYSE:VZ) has the ability to attract and retain a large consumer base while simultaneously growing revenue from wireless services by 2%, demonstrating that the company is effectively capitalizing on existing market opportunities despite its large size and established presence.
Additionally, its focus on expanding into the consumer segment paid off as revenue from this area increased 1.5% to $24.9 billion, indicating that the company is not only retaining its current customer base but also growing its market share.
On August 12, TD Cowen analyst Gregory Williams reaffirmed his buy recommendation and $51.00 price target on Verizon (NYSE:VZ). Williams’ positive outlook is supported by insights from an investor meeting with the company’s Chief Network Officer Lynn Cox and Head of Investor Relations Brady Conner. The analyst highlighted that the company’s C-Band spectrum, which is critical for advanced 5G capabilities, is expected to be largely deployed by the end of 2025. Additionally, AI-driven network enhancements are expected to drive the company’s growth and provide a foundation for future growth.
