Amid consistent advancements in AI and the Internet of Things, demand for 5G has been growing. Despite mixed investor sentiment toward the tech industry due to the looming interest rate hikes this year, the demand for 5G technologies is expected to multiply due to the rapid digitization across industries and the continuing hybrid work culture.
Its high speed and uninterrupted connectivity should keep driving the 5G market’s growth in this digital era. The Biden administration’s infrastructure spending is also set to support the sector. According to Fact.MR, the global 5G services market is expected to expand at a 55% CAGR from 2022 - 2032.
Given this backdrop, Wall Street analysts expect fundamentally strong 5G stocks Marvell Technology, Inc. (MRVL), Telefonaktiebolaget LM Ericsson (publ) (ERIC), and Silicon Laboratories Inc. (SLAB) to rally by more than 35% in price in the coming months. So, it could be worth adding these stocks to your watchlist.
Click here to checkout our 5G Industry Report for 2022
Marvell Technology, Inc. (MRVL)
Hamilton, Bermuda-based MRVL, together with its subsidiaries, designs, develops and sells analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits. It offers a portfolio of Ethernet solutions.
On Dec. 2, 2021, Matt Murphy, MRVL’s President, and CEO, said, "For the fourth quarter, we are expecting sequential revenue growth of 9 percent at the midpoint of guidance, led by 5G, which is projected to increase by 30 percent sequentially and data center, which is forecasted to continue to grow in the double digits on a percentage basis."
MRVL’s net revenue increased 61.5% year-over-year to $1.21 billion for its fiscal year 2022 third quarter, ended Oct. 30, 2021. Its gross profit came in at $587.82 million, up 54.3% year-over-year. The company’s total current assets were $2.24 billion for the period ended Oct. 30, 2021, compared to $1.62 billion for the period ended Jan. 30, 2021.
Analysts expect MRVL’s revenue and EPS to grow 49.7% and 68.5%, respectively, year-over-year to $4.44 billion and $1.55for fiscal 2022. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 36% in price to close yesterday’s trading session at $64.95. Wall Street analysts expect the stock to hit $103.55 in the near term, which indicates a potential 59.4% upside.
Telefonaktiebolaget LM Ericsson (publ) (ERIC)
Headquartered in Stockholm, Sweden, ERIC and its subsidiaries provide communication infrastructure, services, and software solutions to telecom and other sectors. It has four segments: Networks; Digital Services; Managed Services; and Emerging Business and Other.
On March 2, 2022, Indosat Ooredoo Hutchison and ERIC strengthened their strategic partnership to expand their 5G footprint in Indonesia further. Jerry Soper, Head of ERIC, Indonesia, said, “Ericsson is delighted to further strengthen its partnership with Indosat Ooredoo Hutchison by providing 5G services in Jakarta, Bogor, Tangerang, and Bekasi. 5G will play a critical role in accelerating the digitalization of the economy and stimulating next-generation innovation for consumers and enterprises in Indonesia.”
For the fourth quarter, ended Dec. 31, 2021, ERIC’s net sales increased 2.5% year-over-year to SEK 71.33 billion ($7.37 billion). Its net income came in at SEK 10.15 billion ($1.05 billion), up 41.1% year-over-year, while its EPS was SEK 3.02, up 33.6% year-over-year.
ERIC’s revenue is expected to be $27.75 billion in its fiscal 2023, representing a 2.1% year-over-year rise. Also, the company’s EPS is expected to increase 13.1% per annum for the next five years. The stock closed yesterday’s trading session at $8.86. Wall Street analysts expect the stock to hit $14.63 in price in the near term, which indicates a potential 65.1% upside.
Silicon Laboratories Inc. (SLAB)
SLAB in Austin, Tex., is a fabless semiconductor company that provides mixed-signal integrated circuits (ICs) in the United States, China, and internationally. The company offers microcontrollers and wireless products.
On Jan. 24, 2022, SLAB announced the BG24 and MG24 families of 2.4 GHz wireless SoCs for Bluetooth and Multiple-protocol operations, respectively, along with a new software toolkit to bring AI/ML applications and wireless high performance to battery-powered edge devices. Matt Johnson, CEO of SLAB, said, “The BG24 and MG24 wireless SoCs represent an awesome combination of industry capabilities, including broad wireless multiprotocol support, battery life, machine learning, and security for IoT Edge applications.”
SLAB’s revenues were $208.68 million for the fourth quarter, ended Jan. 1, 2022, up 43.1% year-over-year. Its operating income came in at $2.64 million, compared to a $18.41 million operating loss in the prior period. Also, its cash and cash equivalents came in at $1.07 billion for the period ended Jan. 1, 2022, versus $202.72 million for the period ended Jan. 2, 2021.
For its fiscal year 2022, analysts expect SLAB’s revenue to be $948.32 million, representing a 31.6% year-over-year rise. Its EPS is estimated to increase 23.1% to $3.09 in 2023. The company surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 9.3% in price to close yesterday’s trading session at $148.55. Wall Street analysts expect the stock to hit $207.00 in the near term, which indicates a potential 39.4% upside.
Click here to checkout our 5G Industry Report for 2022
MRVL shares rose $0.84 (+1.29%) in premarket trading Wednesday. Year-to-date, MRVL has declined -25.20%, versus a -9.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
3 5G Stocks That Will Rally 35% or More, According to Wall Street StockNews.com
