The technology segment is ever-evolving with rapid technological advancements like AI, blockchain, and 5g technology and is poised to grow significantly. The recent rapid adaption and upgradation of 5g technology by enterprises has further resulted in a rapid market demand.
Against this backdrop, it could be wise to invest in fundamentally strong tech stocks QUALCOMM Incorporated (QCOM), Verizon Communications Inc. (VZ), and AT&T Inc. (T) leading the 5g revolution.
Technology and telecom are evolving at a rapid pace with new innovation, and their all-pervasive application across enterprises, government, and other sectors has resulted in ever-surging demands. Significant R&D investments, adoption of 5G technology, and faster network demand foster the market. With this, the US telecom market is estimated to reach $530.61 billion by 2029, at a CAGR of 3.7%.
Further, high-speed and low-latency capabilities of 5g networks enable real-time data collection and analysis leading to more efficient resource management. The 5G services market is anticipated to expand 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.
Moreover, the revolution of 5g technology is also set to contribute significantly to the semiconductor industry along with technological advancements such as blockchain and AI, edge computing, sustainability, and supply chain resilience. The Global 5G chipset market is expected to reach $109.97 billion by 2029, growing at a CAGR of 19.9%.
The 5G chipsets are expected to be a critical component of 5G networks, soon to be released at a massive scale for smartphone OEMs and telecom players and major telecom service providers are upgrading their networks to 5G to provide ultra-high network speeds and data rates to customers.
Considering the encouraging economic trends, let’s delve into the fundamentals of the tech stocks.
QUALCOMM Incorporated (QCOM)
QCOM engages in the development and commercialization of foundational technologies for the wireless industry globally. The company operates through three segments: Qualcomm CDMA Technologies; Qualcomm Technology Licensing; and Qualcomm Strategic Initiatives.
On May 21, QCOM expanded its Qualcomm® AI Hub to support Snapdragon® X Series Platforms—reducing time-to-market for developers and unlocking the benefits of on-device generative AI in next-gen Windows PCs. Also, developers can now bring their own AI models and seamlessly optimize them to run directly within devices.
With the expansion, QCOM offers developers flexibility and power to create innovative AI applications for next generation Windows PCs and reinstates its commitment to provide tools and resources developers need to unleash the full potential of on-device generative AI.
QCOM’s revenues increased 1.2% year-over-year to $9.39 billion during the second quarter that ended March 24, 2024. Its non-GAAP earnings before taxes rose 11.1% year-over-year to $3.17 billion. The company’s non-GAAP net income and EPS came in at $2.76 billion and $2.44, up 14.1% and 13.5% from the prior year’s quarter, respectively.
In addition, the company’s total assets totaled $53.17 billion as of March 24, 2024, versus total assets of $51.04 billion as of September 24, 2023.
According to the business outlook for third quarter of fiscal 2024, QCOM expects revenues between $8.80 billion - $9.60 billion and its non-GAAP EPS is expected to range from $2.15 to $2.35.
Street expects QCOM’s EPS for the third quarter (ended June 2024) to increase 20.2% year-over-year to $2.25 and its revenue for the same quarter is expected to grow 9.1% year-over-year to $9.21 billion. Also, the company has surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
QCOM’s stock has gained 50.5% over the past six months and 75.7% over the past year to close the last trading session at $205.75.
QCOM’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
QCOM has an A grade for Quality. It is ranked #5 out of 91 stocks in the Semiconductor & Wireless Chip industry.
In addition to the POWR Ratings we’ve stated above, we also have QCOM ratings for Growth, Momentum, Value, Sentiment, and Stability. Get all QCOM ratings here.
Verizon Communications Inc. (VZ)
VZ is engaged in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. The company operates in Verizon Consumer Group (Consumer), and Verizon Business Group (Business) segments.
On June 26, VZ introduced new programs and benefits to offer customers more choices and flexibility, and advance the momentum of its business. VZ also refreshed its brand, bringing forward the energy and vibrancy of how people live, work and play.
On the same day, VZ launched myHome to make it easy for customers to choose, and save. myHome is a one-stop-shop for home internet, live TV, entertainment and connected home offerings – all in one place, and all in your control. The new launch bodes well with the company and will offer best entertainment and connected home perks in one place to the customers.
VZ’s total operating revenues for the first quarter that ended March 31, 2024, increased marginally year-over-year to $32.98 billion and its operating income was $7.52 billion. The company’s net income and EPS came in at $4.72 billion and $1.09, respectively.
Furthermore, the company’s total current assets stood at $37.96 billion as of March 31, 2024, compared to $36.81 billion as of December 31, 2023.
Analysts expect VZ’s revenue and EPS for the fourth quarter (ending December 2024) to grow marginally and 2.5% year-over-year to $35.41 billion and $1.11, respectively. Also, the company topped the consensus EPS estimates in three of the four trailing quarters.
Shares of VZ have surged 2.7% over the past six months and 10.1% over the past year to close the last trading session at $41.27.
VZ’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Stability. Within the Telecom - Domestic industry, VZ is ranked #5 among 17 stocks.
Click here to access additional ratings of VZ for Sentiment, Momentum, Growth, Value, and Quality.
AT&T Inc. (T)
T offers telecommunications and technology services globally. It operates in two segments, Communications; and Latin America. The company offers wireless voice and data communications services, and sells handsets, wireless data cards, wireless computing devices, carrying cases/protective covers, and wireless chargers.
On June 26, T’s Board of Directors declared a quarterly dividend of $0.28 per share on its common shares. The board also declared quarterly dividends on the company’s 5.000% Perpetual Preferred Stock, Series A of $312.50 per preferred share, or $0.3125 per depositary share and its 4.750% Perpetual Preferred Stock, Series C of $296.875 per preferred share, or $0.296875 per depositary share.
Dividends on the common stock and Series A and Series C preferred stock will be paid on August 1, 2024, to stockholders of record at the close of business on July 10, 2024. T pays an annual dividend of $1.11, which translates to a yield of 5.91% at the current share price. Its four-year average dividend yield is 7.19%.
On May 15, T and AST SpaceMobile entered a definitive commercial agreement to provide a space-based broadband network directly to everyday cell phones, extending until 2030, marking a significant step towards enhanced connectivity across the U.S.
During the first quarter that ended March 31, 2024, T’s operating revenues rose marginally year-over-year to $28.59 billion, while its operating income rose 3.1% year-over-year to $6.47 billion. The company’s adjusted EBITDA came in at $11.05 billion, up 4.3% year-over-year and its adjusted EPS stood at $0.55.
Also, the company’s free cash flow increased 210% from the year-ago value to $3.10 billion.
Street expects T’s revenue for the fiscal year (ending December 2025) to increase 1.3% year-over-year to $124.47 billion, while its EPS is expected to grow 2.8% year-over-year to $2.27, respectively. Furthermore, the company surpassed the consensus EPS estimates in three of the trailing four quarters.
T’s stock has gained 7.4% over the past six months and 16.8% over the past year to close the last trading session at $18.77.
T’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Value. T is ranked #3 among 17 stocks in the Telecom - Domestic industry.
Click here to access T’s ratings for Quality, Growth, Stability, Momentum, and Sentiment.
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QCOM shares were trading at $207.03 per share on Monday afternoon, up $1.28 (+0.62%). Year-to-date, QCOM has gained 44.46%, versus a 17.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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