The 5G revolution is transforming connectivity, with tech giants at the forefront of developing infrastructure and applications. The ultra-high reliability in latency, speed, and security are such advancements that are reshaping industries, from telecommunications to autonomous vehicles and healthcare.
Given the industry’s robust prospectus, it might be wise to consider the fundamentally strong tech giants T-Mobile US, Inc. (TMUS), QUALCOMM Incorporated (QCOM), and Verizon Communications Inc. (VZ) for the 5G revolution.
5G technology unlocks new possibilities in various sectors, such as the entertainment industry, which benefits from faster streaming and gaming capabilities, while healthcare leverages 5G for telemedicine and remote surgeries. Similarly, smart cities are becoming a reality due to 5G-enabled edge computing and IoT devices that drive efficiency and transportation.
Moreover, one important aspect is the high-speed and low-latency capabilities of 5G networks that enable business access to real-time data, leading to more efficient resource management. With businesses keen to reduce their carbon footprint, firms are not only developing 5G infrastructure but also providing solutions that enable the ecosystem to thrive.
The 5G market is projected to grow exponentially, with billions of dollars being funneled into its development. The 5G services market is anticipated to grow at a CAGR of 34.2%, resulting in a market volume of $427.70 billion by 2028, driven primarily by environmental monitoring and sustainability initiatives.
For investors, these companies offer exposure to one of the most transformative technologies of the decade. With that in mind, let’s delve into the fundamentals of the above-mentioned stocks.
T-Mobile US, Inc. (TMUS)
TMUS is a provider of mobile communications services, including voice, messaging, and data, under its flagship brands, T-Mobile and Metro by T-Mobile. It offers mobile communications services primarily using its 4G Long Term Evolution (LTE) network and its 5G technology network.
On October 8, TMUS announced the introduction of 5G on Demand, a complete, portable 5G private network and services solution that includes setup, teardown, and network management. This new solution will help in cutting costs and enhance operational efficiency and flexibility. It should also help TMUS secure a top spot in the communications industry as it is catering to the growing needs of its customers.
On September 18, demonstrating its commitment to returning value to shareholders, the company declared a quarterly dividend of $0.88 per share, up 35% from the previous quarter, payable to its shareholders on December 12, 2024. TMUS pays an annual dividend of $3.52, which translates to a yield of 1.44% at the current share price. Its four-year average dividend yield is 0.22%.
For the third quarter of 2024, which ended on September 30, TMUS’ total revenues increased 4.7% year-over-year to $20.16 billion, while its postpaid service revenues grew 8.3% from the same period last year to $13.31 billion.
The company’s adjusted EBITDA for the quarter amounted to $8.24 billion, representing an increase of 8.5% year-over-year. Its net income stood at $3.06 billion, up 42.8% year-over-year, while its earnings per share rose 43.4% from the prior year’s quarter to $2.61. Also, TMUS’ adjusted free cash flow grew 29% from the year-ago value to $5.16 billion.
Building on this quarter’s momentum, the company updated its guidance for 2024. TMUS anticipates that the full-year core adjusted EBITDA will range between $31.60 billion and $31.80 billion. It also forecasts adjusted free cash flow in the range of $16.70 billion to $17 billion and postpaid net customer additions to be between 5.6 million and 5.8 million.
The consensus revenue estimate of $21.40 billion for the fiscal fourth quarter (ending December 2024) represents a 4.5% increase year-over-year. The consensus EPS estimate of $2.30 for the current quarter indicates a 25.8% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.
The stock has gained 58.4% over the past year and 47% over the past nine months to close the last trading session at $243.94.
TMUS’ POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
TMUS has a B grade for Growth, Stability, Sentiment, and Quality. It is ranked #6 out of 20 stocks in the Telecom - Domestic industry. Click here to see the additional ratings for TMUS (Value and Momentum).
QUALCOMM Incorporated (QCOM)
QCOM engages in the development and commercialization of foundational technologies for the wireless industry worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI).
On October 24, QCOM collaborated with Mistral AI to bring Mistral AI’s new state-of-the-art generative AI models, Ministral 3B and Ministral 8B, to devices powered by Snapdragon. This collaboration of generative AI is compact and powerful and should enable the devices to have other benefits, like reliability, enhanced privacy, and cost efficiency.
In the same month, QCOM announced a collaboration with Google. This strategic collaboration will allow Snapdragon Digital Chassis and Google’s in-vehicle technologies to deliver a standardized reference framework for the development of generative AI-enabled digital cockpits and software-defined vehicles (SDV).
QCOM's revenues for the fourth quarter (ended September 29, 2024) increased 18.7% year-over-year to $10.24 billion. The company reported a non-GAAP operating income of $3.51 billion, indicating a 31.4% growth from the prior year's quarter. QCOM’s non-GAAP net income came in at $3.04 billion, up 33.3% year-over-year, while its net income per share grew 33.2% from the prior-year quarter to $2.69.
Looking ahead, QCOM anticipates revenue for the fiscal first quarter of 2025 to fall between $10.50 billion and $11.30 billion, and QCT segment and QLT segment revenues are anticipated to be in the range of $9 billion-$9.60 billion and $1.45 billion-$1.65 billion, respectively. The company also projects non-GAAP EPS to range from $2.85 to $3.05.
Street expects QCOM’s revenue for the fiscal first quarter (ending December 2024) to increase 10.5% year-over-year to $10.96 billion. Moreover, its EPS estimate of $2.95 for the same period indicates a 7.4% year-over-year growth. In addition, it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is excellent.
Over the past year, the stock has surged 22.7%, closing the last trading session at $160.39.
QCOM’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has an A grade for Quality and a B for Value. Within the Semiconductor & Wireless Chip industry, it is ranked first out of 90 stocks. Click here to see QCOM’s ratings for Growth, Momentum, Stability, and Sentiment.
Verizon Communications Inc. (VZ)
VZ offers communications, information, and entertainment products and services to consumers, businesses, and governmental agencies. It operates through two segments, Verizon Consumer Group and Verizon Business Group, providing wireless and wireline communications services and products in the United States.
On November 1, buoyed by strong financial performance, the company paid its quarterly dividend, which increased by 1.25 cents to $0.6775 per share.
VZ has raised its annual dividend for 18 consecutive years. It pays an annual dividend of $2.71, which translates to a yield of 6.37% at the current share price. Its four-year average dividend yield is 5.90%. Moreover, the company’s dividend payouts have increased at an impressive CAGR of 2% over the past five years.
On September 30, VZ and Vertical Bridge entered into an agreement for Vertical Bridge to obtain the exclusive rights to lease, operate, and manage 6,339 wireless communications towers across all 50 states from VZ for $3.3 billion, with an upfront $2.8 billion in cash. This transaction will save VZ costs and create greater vendor diversity in the market.
In the fiscal third quarter that ended on September 30, 2024, VZ’s service revenues and other increased marginally year-over-year, amounting to $27.99 billion. The company’s consolidated adjusted EBITDA came in at $12.49 billion, up 2.1% year-over-year, and its EPS stood at $0.78. In addition, its total broadband subscribers stood at 11.9 million, representing an increase of nearly 16% year-over-year.
According to VZ’s guidance and outlook for its fiscal year 2024, it is projecting adjusted EBITDA to grow between 1% and 3%. Additionally, its adjusted EPS guidance ranges from $4.50 to $4.70. The company also expects total wireless services revenue growth to range between 2% and 3.5%.
Analysts expect VZ’s revenue for the fourth quarter (ended December 2024) to increase marginally year-over-year to $35.44 billion, while its EPS for the same quarter is expected to grow 2.9% from the prior year to $1.11. Moreover, the company has consistently exceeded expectations, surpassing the street EPS estimates in three of the trailing four quarters.
Shares of VZ have gained 10.8% over the past year and 12.9% year-to-date to close the last trading session at $42.55.
It’s no surprise that VZ has an overall rating of B, equating to a Buy in our POWR Ratings system. It has a B grade for Growth, Stability, and Sentiment. Out of 20 stocks in the Telecom - Domestic industry, VZ is ranked #3.
Beyond what is stated above, we’ve also rated VZ for Value, Momentum, and Quality. Get all VZ ratings here.
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TMUS shares were trading at $243.74 per share on Friday afternoon, down $0.20 (-0.08%). Year-to-date, TMUS has gained 54.27%, versus a 29.05% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
