Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Big Developments in America’s 5G Rollout Stock Investors Need to be Aware of

Companies / Mobile Technology Jun 03, 2019 - 02:57 PM GMT

By: Stephen_McBride

Companies

My longtime readers know 5G is the most disruptive force of the decade.

In short, 5G will supercharge America’s wireless networks. It will give us internet speeds 1,000x faster than today’s.

This will open up a whole new world of disruption.


Think of 5G as a “tool” that will enable tomorrow’s disruptive businesses, one of which I revealed in my free special report, The Great Disruptors.

For example, how many of the following do you use?

  • Music streaming services like Spotify
  • YouTube’s video streaming
  • Ride-hailing from Uber
  • Amazon’s online store

The last wireless upgrade—4G—is the driving force behind them all.

4G arrived in the early 2010s and brought us much faster speeds. With that came the ability to do things like watch movies, stream music, or shop from anywhere on your phone.

4G allowed disruptors like Google (GOOG), Amazon (AMZN), and Netflix (NFLX) to flourish. From 2010 to today, their stocks grew 325%, 1,350%, and 3,825%.

5G will be MUCH bigger than 4G.

4G was an upgrade. 5G is a total overhaul. It’s going to enable transformative disruptions like self-driving cars and remote surgery.

Today, I’ll tell you about two big new developments in 5G—and what they mean for investors.

Quietly, 5G Is Driving One of the Biggest Disruptions of 2019

As you may have heard, the US Government recently banned Chinese telecom giant Huawei from doing business in the US.

I warned back in February this was likely to happen. My prediction ruffled some feathers. Huawei reps even contacted me to insist I was wrong!

Huawei is the world’s second-largest phone maker, behind only Samsung. It stands accused of placing secret “backdoors” in its equipment. If true, these backdoors allow the Chinese government to spy on Americans who use Huawei’s gear.

Huawei is a private company. It has no publicly-traded stock. But its ban rocked markets all the same...

You see, Huawei buys a ton of parts from American companies. It bought $20 billion worth of computer chips from US companies last year, according to investment bank Evercore.

US chipmaker Qorvo (QRVO) gets 13% of its revenue from Huawei...

Radio-frequency firm Skyworks Solutions (SWKS) counts Huawei as its third-largest customer...

And facial recognition company Lumentum (LITE) gets almost 20% of its sales from Huawei.

As you can see in this chart, all three stocks tanked on the news.



While the Huawei ban is terrible for companies that sell to it, it’s GREAT for companies that compete with it in 5G.

Nokia and Ericsson Will Take the Lead in the 5G Race

Huawei is the world’s largest maker of 5G infrastructure.

It had secured $100 billion worth of 5G contracts—more than five times any of its rivals. But with Huawei all but banned from the Western world, those contracts have been torn up.

Only two other companies can step up to fill the void: Nokia (NOK) and Ericsson (ERIC).

You can see in this chart that both stocks jumped when Huawei’s ban was confirmed... and they’ve continued to march higher.

The Sprint and T-Mobile Merger Is a Big Deal

If you live in America, I can almost guarantee you use one of four carriers: AT&T (T), Verizon (VZ), T-Mobile (TMUS), or Sprint (S).

These four have the US cell market on lockdown. They own 98% of the $260 billion/year market.

The US government has always been leery of letting phone companies grow too powerful. If too much power concentrates with too few companies, they can take advantage of customers.

When the old AT&T got too big back in the 70s, the government broke it up into seven smaller companies.

The government has also blocked several phone company mergers. In 2011, it shot down AT&T’s attempt to buy T-Mobile.

So, many investors were caught off guard when the US government all but approved a merger between Sprint and T-Mobile.

Sprint and T-Mobile are America’s third- and fourth-largest cell companies.

Together, they’ll form a new “supercarrier” with 136 million customers—making it a close third to Verizon with its 155 million customers.

The stocks of all four US cell companies jumped higher on the news. Sprint shot up 25% in a single day.

With this merger, three companies will effectively control the whole US cell market.

Why would the US government allow this?

It all comes back to 5G...

The US government, and the Trump administration in particular, have been adamant that the US be first in 5G. In April Trump said: “The race to 5G is a race America must win.

A 2019, GSM Association report estimates US cell companies will have to spend $100 billion over the next two years to get America 5G ready.

In short, T-Mobile and Sprint didn’t have the cash to build their own 5G networks. So they’re joining forces to build one giant network.

According to one estimate, the merger will boost the number of 5G markets Sprint and T-Mobile can serve by 8x.

Think of 5G Like Gravity…

As we all learned back in school, gravity is an invisible force that pulls objects toward each other.

The earth’s gravity keeps your feet planted on the ground… and makes apples fall from trees.

Like gravity, 5G is a hidden force affecting everything right now.

It’s a key reason why the US government blacklisted Huawei.

It’s why the government made the unusual move to greenlight the Sprint / T-Mobile merger.

And keep in mind, the 5G buildout is still only in first gear. 5G will cause massive disruption as it comes online in the next couple years.

By Stephen McBride

http://www.riskhedge.com

© 2019 Copyright Stephen McBride - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in