This telecom giant is plugging the profits from a major 5G investment.
With all the talk about artificial intelligence in 2024, distracted investors may miss out on other fast-rising technologies that are producing profits in stock market portfolios.
Take the 5G sector, which is growing like gangbusters right now. The global 5G market is expected to crest $28 billion in 2024, and will reach $61 billion by 2029, according to Mordor Intelligence That’s a 16.8% compounded annual growth rate.
Investors should pay attention as 5G is the next generation of wireless technology and its picking up speed.
“The technology promising faster speeds, lower latency, and the potential to revolutionize industries like healthcare, autonomous vehicles, and the Internet of Things (IoT),” says Kate Leaman, chief market analyst at AvaTrade. “Trends include increasing consumer demand for high-speed connectivity and the emergence of new applications like augmented reality and edge computing.”
Fast-rising 5G stocks include companies like Qualcomm (QCOM), NVIDIA (NVDA), and T-Mobile (TMUS).
Each has momentum in the 5G market. Qualcomm is a leader in 5G chipsets, poised to benefit from the widespread adoption of 5G-enabled devices, while NVIDIA provides the technology for AI-powered 5G applications.
But the most significant 5G sector stalwart is telecom giant T-Mobile.
“TMUS stands out for its aggressive 5G network expansion and merger with Sprint, positioning it as a formidable player in the market,” Leaman says. “The company has strong fundamentals, innovative technologies, and strategic partnerships, making it an attractive investment in the growing 5G ecosystem.”
Share performance has been spotty this year, with T-Mobile stock up just 4.7% in 2024 versus 7.1% for the benchmark S&P 500.
Yet market watchers expect T-Mobile to prosper in a newly consolidated wireless telecommunication market, along with Verizon (VZ) and AT&T (T), as 5G rolls out to the masses and as the technology accelerates, performance-wise.
5G Capacity That Easily Outpaces the Competition
A case in point.
Before the 202 merger between T-Mobile and Sprint, average data download speeds among the top wireless companies stood at 26 megabits per second, pretty much topping out on 4G rate speeds. 5G speeds have easily surpassed preceding wireless technologies, with T-Mobile 5G data speeds three times higher than in its 3G and 4G eras.
Maybe that’s why T-Mobile’s 5G user base is expanding. By January, 2023, TMUS had connected almost 50% of its user base to 5G connectivity, approximately 10% more than high-profile competitors like Verizon.
In its most recent quarterly release, T-Mobile says its 5G capacity now covers 98% of the U.S., calling it the “largest footprint in the industry” while noting its 5G coverage is bigger, square mile-wise, than both AT&T and Verizon.
“What’s really exciting is that while we’ve delivered fantastic results, we’ve also got room to run,” says company CEO Mike Sievert, who notes that T-Mobile returned $14.0 billion to stockholders in 2023, including repurchases of $13.2 billion of common stock and a first quarterly dividend payment of $747 million.
No doubt, T-Mobile has a good 5G story to tell investors, and they may want to hear it. If that is, they can tear themselves away from all the AI frenzy.
