How Two 5G Stocks Could Position Investors for 2020's Wireless Revolution

The wireless industry stood at an inflection point as the 2020s approached. Fifth-generation (5G) networks represented a fundamental shift in how data would travel across networks globally. This created a dual investment opportunity: companies enabling 5G infrastructure would benefit just as much as those manufacturing 5G-capable devices. Understanding these two distinct angles proved crucial for investors looking to capitalize on what many analysts expected to be one of the decade’s defining technological transitions.

The underlying data painted a compelling picture. Research firm Gartner forecasted that 5G wireless infrastructure spending would surge to nearly $4.2 billion that year, nearly doubling from $2.2 billion in 2019 as nations accelerated their network deployments. Simultaneously, the smartphone side of the equation was equally dramatic. IDC estimated that 5G smartphone demand would reach 123.5 million units, representing 8.9% of the overall market—a seismic jump from just 6.7 million units sold in 2019. This combination of infrastructure investment and consumer hardware adoption created distinct investment angles through two companies: Apple (NASDAQ: AAPL) and Applied Materials (NASDAQ: AMAT).

Apple’s Transformation Through 5G Smartphone Adoption

The smartphone market had been grinding through a cycle of maturation and saturation through 2019. While early 5G models had emerged, 2020 marked the year when 5G penetration would reach critical mass. Apple appeared positioned to be the primary beneficiary of this inflection point.

The tech giant was refreshing its approach to pricing and product positioning. Reports indicated that every iPhone model set to launch would include 5G capability, ranging from premium flagship devices down to budget-conscious alternatives. Particularly intriguing was the rumored iPhone SE 2, priced at an aggressive $399, which could democratize 5G access if it successfully bundled the technology into an affordable package. Supply chain intelligence suggested Apple might employ a tiered approach, allowing consumers to upgrade to 5G-enabled variants at modest price premiums.

Market analysts painted a picture of dominance. According to Nikkei Asian Review sourcing, Apple was expected to ship 80 million 5G smartphones during the year. Strategy Analytics, a respected market research firm, similarly forecasted Apple capturing the leading market share. Beyond new sales, Apple possessed a significant structural advantage: an installed base of roughly 900 million iPhones, with approximately 350 million devices eligible for upgrades. Wedbush Securities estimated that roughly 200 million of these aging handsets could transition to 5G models beginning that year, creating an internal reservoir of potential buyers.

Wall Street consensus reflected optimism about Apple’s revenue trajectory. After several challenging years, analysts expected the company’s top line to return to growth in the current fiscal year, with acceleration anticipated thereafter. This represented a meaningful inflection point for a company that had faced skepticism about its ability to drive future growth.

Applied Materials: The Infrastructure Play in 5G Transformation

While Apple represented the consumer-facing angle on 5G stocks for 2020, Applied Materials offered a fundamentally different exposure—a play on the infrastructure buildout without direct consumer exposure. The company’s core business centered on supplying semiconductor fabrication equipment to chipmakers worldwide, positioning it to benefit from the massive upgrade cycle that 5G demanded.

The technical requirements of 5G networks necessitated significant hardware evolution. These networks promised to deliver data rates ten times faster than 4G with dramatically reduced latency. Such performance characteristics required chipmakers to completely refresh their fabrication capabilities to produce processors capable of handling these new demands. Telecom carriers and data center operators would need to undertake substantial capital expenditures to upgrade their infrastructure.

Applied Materials’ analysis of the Chinese market illustrated the scale of opportunity. Of 1.7 million cellular base stations in China, only 10,000 possessed 5G capability at the time of analysis. This massive disparity meant that equipment manufacturers like Applied Materials anticipated enormous demand from customers seeking to upgrade production capacity. During earnings calls, CEO Gary Dickerson emphasized that “strong investment by foundry logic customers driven by demand in key geographies and acceleration of the 5G roadmap” reinforced his confidence in the company’s near-term prospects.

The financial trajectory supported this optimism. Applied Materials’ customer base—semiconductor foundries—accounted for just over half of total revenue, meaning that 5G-driven demand would flow directly through to the company’s financial statements. Though the company had reported a 13% revenue decline in fiscal 2019, early signs of recovery were already evident. Management guidance for the current quarter projected $4.1 billion in sales, representing a 9% increase from $3.75 billion in the equivalent quarter the prior year. Consensus analyst estimates suggested full-year revenue growth of 12.5% year-over-year, indicating that a meaningful turnaround was taking shape. Trading at just 16 times forward earnings estimates, the stock appeared reasonably valued relative to the growth prospects implied by 5G deployment acceleration.

Two Complementary Routes to 5G Stock Exposure

These two holdings offered investors distinctly different ways to participate in the 5G transformation unfolding in 2020 and beyond. Apple provided direct exposure to consumer adoption trends and smartphone market dynamics. Applied Materials delivered leveraged exposure to capital equipment spending, amplifying the returns that would flow from infrastructure buildout. Together, they represented both the visible and invisible layers of the emerging 5G ecosystem—one making products consumers would purchase, the other enabling the manufacturing infrastructure that made those products possible.

For investors seeking to position themselves around 5G stocks for 2020, understanding these complementary angles proved essential to constructing a diversified approach to capturing the wireless revolution’s benefits.