Every so often, a new technology emerges which has massive impacts on the way people live that are hard to forecast. In stock market terms, it can lead to massive gains for companies exposed to that trend. Examples are software in the 80s, IT in the 90s, and smartphones in the past decades.
Full 5G by 2022
One more subtle trend that is going to unleash a wave of secondary and tertiary effects is the ongoing build-out of 5G wireless networks. 4G networks began to be built in 2010, and it took until 2013 for it to blanket the country. Because of the higher speeds of 4G networks, it enabled mobile-centric apps like Uber (Nasdaq: UBER) and Snap (Nasdaq: SNAP) to flourish. Smartphones have replaced PCs for the main way that most people use the Internet.
Currently, it's expected to take until 2022 before 5G completely replaces 4G. 5G allows for faster data speeds, more data transmission, and will allow for more devices to be connected to the network. One result of 5G is that all types of sensors and smart devices will be connected to the wireless grid. 5G download speeds will also be six to seven times faster than 4G. The capacity for the number of devices it can support at these speeds is four times more than 4G.
This is going to augment the power and capabilities of smartphones and make streaming virtual reality or augmented reality a possibility. It will also make video quality much better. Ultimately, people may no longer feel the need to have the internet at home, since their phones will be so much faster.
Secondary Effects
All of the major cell phone carriers in the U.S. and across the world are upgrading their networks. This is leading to higher demand for network equipment. Higher demand due to industry-wide demand also gives these companies more pricing power.
Some of the leading network equipment stocks are Ciena (Nasdaq: CIEN), Ericsson (Nasdaq: ERIC), and Nokia (NYSE: NOK). Cell phone tower operators will also see a surge in business during this upgrade cycle. These companies include Crown Castle (NYSE: CCI), American Tower (NYSE: AMT), and SBA Communication (Nasdaq: SBAC).
Smartphone companies' new devices will be 5G enabled and could unleash a new upgrade cycle for phones which would benefit Apple (Nasdaq: AAPL) and Samsung. The companies that supply them, network equipment, and cell towers with chips will also see gains like Qualcomm (Nasdaq: QCOM), Lumentum (Nasdaq: LITE), and Marvell Technology (Nasdaq: MRVL).
Conclusion
The most interesting ramification will be the consumer-facing apps that take advantage of 5G's power. Just like it was impossible to imagine how smartphones evolved and all the creative and destructive uses of it, there are going to be several surprising outcomes. However, history tells us that these industry-wide shifts lead to big stock gains for companies in that space.