The global 5G race has been intensifying over the past year, as countries rush to deploy the technology to boost their technical prowess. Moreover, the demand for 5G connectivity is expected to rise, especially with the advent of the omicron variant and the resurgence of COVID-19 cases, which are driving continued hybrid working conditions. Thus, investors have been increasingly betting on 5G stocks despite market volatility. This activity is evidenced by the Defiance 5G Next Gen Connectivity ETF’s (FIVG) 6.1% gains over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 0.8% loss.

In addition, 5G is an integral part of rapid AI and IoT innovations that are facilitating operational efficiency with increased bandwidth and highly developed innovative technology. According to a Research and Markets report, the global 5G services market size is expected to grow at a 46.2% CAGR  between 2021 – 2028.

Given this favorable backdrop, we think top 5G stocks Broadcom Inc. (AVGO), Analog Devices, Inc. (ADI), and Micron Technology, Inc. (MU) could be solid picks now.

Click here to checkout our 5G Industry Report for 2021

Broadcom Inc. (AVGO)

San Jose, Calif.-based AVGO develops and supplies semiconductor infrastructure software solutions. It operates through two segments: Semiconductor Solutions and Infrastructure Software. Also, its category-leading product portfolio serves critical markets, such as data centers, networking, and others.

On November 8, 2021, AVGO announced the launch of its 100G/lane optical PAM-4 DSP PHY families with an integrated trans-impedance amplifier and laser driver, the Jesko BCM8741x and Gemara BCM8781x. They are optimized for 400G DR4/FR4 and 800G DR8/2xFR4 module applications, respectively. Vijay Janapaty, vice president and general manager of the Physical Layer Products Division at AVGO, said, “Broadcom’s innovative and highly integrated optical DSPs drive industry-leading optical module solutions that meet the roadmap needs of our hyper-scale cloud customers.”

AVGO’s non-GAAP net revenue increased 16.4% year-over-year to $6.78 billion for its fiscal third quarter ended August 1, 2021. The company’s non-GAAP net income increased 28.3% year-over-year to $3.12 billion. Also, its non-GAAP EPS came in at $6.96, up 28.9% year-over-year.

Analysts expect AVGO’s revenue to increase 14.8% year-over-year to $27.41 billion in its  fiscal 2021. Its EPS is expected to grow 26.1% year-over-year to $27.94 in the current year. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 37.9% in price to close yesterday’s trading session at $553.68.

AVGO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

AVGO has an A grade for Momentum and a B grade for Growth, Quality, Sentiment, and Stability. Within the A-rated Semiconductor & Wireless Chip industry, it is ranked #1 out of 101 stocks. Click here to see the additional POWR Rating for Value for AVGO.

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Analog Devices, Inc. (ADI)

ADI designs, manufactures, tests, and markets integrated circuits, software, and subsystems that leverage analog, mixed-signal, and digital signal processing technologies. It serves around 125,000 customers worldwide with more than 75,000 products. ADI is headquartered in Norwood, Mass.

On November 30, 2021, ADI announced the expansion of its Linux distribution by recognizing more than 1000 ADI peripherals supported by in-kernel Linux device drivers. David Babicz, Director of Engineering at ADI, said, “With these drivers, we can serve our customers more holistically by streamlining the software development process and making it more cost and resource-efficient.”

For its  fiscal fourth quarter ended October 30, 2021, ADI’s revenue increased 53.3% year-over-year to $2.34 billion. The company’s adjusted operating income came in at $1.01 billion, up 58.6% year-over-year. And its adjusted EPS increased 20.1% year-over-year to $1.73.

ADI’s revenue is expected to be $10.66 billion in its fiscal 2022, representing a 45.7% year-over-year rise. The company’s EPS is expected to increase 16.9% year-over-year to $7.55 in the current year. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 29.6% in price to close yesterday’s trading session at $180.25.

ADI has an A grade for Momentum in our POWR Ratings system. It is ranked #71 in the Semiconductor & Wireless Chip Industry. Click here to get the ratings of Growth, Value, Stability, Sentiment, and Quality for ADI.

Micron Technology, Inc. (MU)

MU designs, manufactures, and sells memory and storage products worldwide. The Boise, Idah0-based company operates through four segments: Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit.

On September 28, 2021, Micron Technology President and CEO Sanjay Mehrotra said, “In fiscal 2021, we established DRAM and NAND technology leadership, drove record revenues across multiple markets, and initiated a quarterly dividend. The demand outlook for 2022 is strong, and Micron is delivering innovative solutions to our customers, fueling our long-term growth.”

MU’s non-GAAP revenue for the fiscal fourth quarter, ended September 2, 2021, came in at $8.27 billion, up 36.6% year-over-year. Its non-GAAP net income increased 126% year-over-year to $2.78 billion. Also, its non-GAAP EPS came in at $2.42, up 124.1% year-over-year.

Analysts expect MU’s revenue to increase 16.1% year-over-year to $37 billion in its fiscal year 2023. Its EPS is expected to increase 44.6% year-over-year to $8.76 in the current year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 31.1% in price to close yesterday’s trading session at $84.

It is no surprise that MU has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Momentum and a B grade for Growth, Value, and Quality.

MU is ranked #9 in the Semiconductor & Wireless Chip Industry. Click here to see the additional POWR Ratings for MU (Stability and Sentiment).

Click here to checkout our 5G Industry Report for 2021

AVGO shares were trading at $559.46 per share on Wednesday afternoon, up $5.78 (+1.04%). Year-to-date, AVGO has gained 30.73%, versus a 22.53% 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. More...

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