Are these the best 5G shares to watch in April 2024?

The market buzz may be all over artificial intelligence these days but don’t forget 5G. The roll-out of the fifth generation mobile network and its prospects are just as sexy as those of AI, if not as much in the headlines.

According to Grand View Research, the global 5G services market size was valued at $84.31 billion in 2023 and is forecast to grow at a compound annual growth rate (CAGR) of 59.4% from 2023 to 2030.

With the help of artificial intelligence, 5G networks will enable the long talked about ‘internet of things’ where individual wifi-enabled devices can talk to each other, generating technological advancements to come on in leaps and bounds.

It will make mobile and download speeds four times faster than 4G networks allow, enabling TV programmes, for example, to be downloaded in seconds rather than minutes.

Capacity will also be dramatically improved, with thousands of customers better able to get a signal in a crowded sports stadium, for example. Lag will also be reduced – this is the amount of time it takes a service provider to respond to your device – which is expected to help with activities such as virtual reality gaming.

What’s more, it is also expected to help with the roll-out and extended capability of AI, including enabling driverless cars and healthcare robots to operate.

Best 5G shares to watch

Companies in a number of different telecommunications sectors could benefit from the developments, from firms that own communications real estate to those that make the microchips used in 5G handsets, as well as the mobile giants that actually operate the 5G networks.

Here are some of the shares we think might benefit. These have been chosen for recent market news.

Past performance is not a guide to future performance.

1. American Tower Corporation
2. Digital Realty
3. Verizon Communications
4. Vodafone
5. NVidia

American Tower Corporation (AMT:NYQ)

American Tower Corporation is a US real estate investment trust (REIT) – a property holding company for a number of communications assets. It owns and leases out property to communications firms, such as TV and radio broadcasting companies, government agencies and wireless network provider towers in 25 different countries across six continents. It also operates data centres. This is the infrastructure that its clients require to deploy 5G technology across their businesses. As such, company says it looks set to enjoy continued growth from the move to 5G and 6G, which it says should “to drive tremendous demand for our communications infrastructure assets.”

Net income for the full year slid by 19% to $1.3 billion, however, despite revenues growing by 4% to $11.1 billion, but fourth quarter net income was healthier, up 102% to $13 million. Full year figures were hit by currency losses and impairment charges. The shares are down 2% this year but analysts at broker Barclays think they could reach $234, while those at HSBC have a price target of $245. The stock yields 3%, which may interest income seekers.

Digital Realty (DLR:NYQ)

Like American Tower Corporation, Digital Realty is another real estate investment trust. It is the biggest owner and operator of data centres across the world, including in the US, Latin America, Europe and Africa.
It services industries such as cloud IT, social networking and communications, the financial services sector, manufacturing and healthcare, among many others. Its global data centre platform PlatformDIGITAL enables customers to scale up their digital businesses globally. Digital Realty recently formed a joint venture with Mitsubishi to support the development of two data centres in Dallas and signed another $7 billion deal with Blackstone in December to deliver data centres in Frankfurt, Paris and North Virginia.

The shares have had a good run over the past 12 months and are up 51% to $141.76. They are also highly rated, trading on a price earnings ratio of 47. However, analysts at broker Citigroup currently have a price target of $160 on the shares.

Verizon Communications (VZ:NYQ)

Communications giant Verizon provides mobile and wireless communications services across the world and claims it is America’s most reliable 5G network. The US company says 5G is a “once-in-a-generation breakthrough platform” with the potential to “dramatically change what we think is possible” in areas such as consumer devices, artificial and virtual reality, remote healthcare and autonomous robotics in manufacturing.

Its 5G service is already available to 200 million users across the US and it is busy partnering with other large corporations, including IBM and Amazon to develop new applications for the technology and artificial intelligence.

The shares, which yield 6.5% trade on a reasonable price earnings ratio of 15 and are up by 10% this year to $41.73. However, analysts at Tigress Financial currently have a price target of $50 on the stock and a buy recommendation.

Vodafone (VOD:LON)

Vodafone shares are down 25% this year to 68p and have disappointed investors for some time. However, chief executive Margherita Della Valle, who was appointed last year, is busy trying to make the sprawling business less complex by selling off non-core operations.

The company has just sold its Italian business Vodafone Italia to Swisscom for €8 billion. It says it plans to return €4 billion to investors following the deal. It also recently disposed of Vodafone Spain. One fly in the ointment is a likely probe by the Competition and Markets Authority into its planned merger with Three, owned by Hong Kong-based CK Hutchinson. The CMA has raised concerns that the deal may reduce choice and put up prices for mobile customers, as it reduces the main mobile operators from four to three in the UK market. The merger has been in the works for two years.

Meanwhile, Vodafone’s 5G network was rolled out in 2019 and it claims the merger with Three would deliver £11 billion of investment in 5G and help make the UK a more attractive prospect for businesses. Meanwhile, the shares yield an attractive 11%.

NVidia (NVDA:NSQ)

Specialist chipmaker NVidia is already benefiting from the investment in and buzz from AI, however it also has a stake in the 5G industry. Its AI-on-5G platform combines the capabilities of AI and 5G, enabling industrial artificial intelligence applications to be deployed over 5G networks, with its graphics processing units (GPUs) a key part of the puzzle. A number of big corporations, including Ericsson, Fujitsu and Microsoft, are working with NVidia to use the platform with their applications and devices.

NVidia says the manufacturing industry, including automotive, industrial and electronics sectors, and the mining industry are early adopters of the platform. The technology helps power precision manufacturing robots, automated cars and drones, as well as self-checkout aisles. Trading on an astronomical price earnings ratio of around 77, the shares are extremely highly rated and have had a strong run, but are worth watching for any weakness.

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The Best 5G shares to watch summed up

There are a number of different shares that may benefit from the roll-out of 5G – these are just a small number of stocks to watch. Always do your own research. Past performance is not a guide to future performance.

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