Apple just released its 5G-capable iPhones, ushering in the next-generation of smartphones. And this under-the-radar stock may be the best way to play the 5G rollout and Apple’s iPhone sales super cycle.
Apple (NASDAQ: AAPL) debuted its newest iPhones on October 14, complete with 5G speeds and capabilities, ushering in the next generation of 5G-capable smartphones.
But while the new iPhones may spark a super cycle of phone sales for Apple, which will send the stock higher, one trader says there’s a better way to play the rollout.
TradingAnalysis.com founder Todd Gordon said this week that Qualcomm (NASDAQ: QCOM) may be a better way to profit on 5G iPhones in the near term.
Apple signed on to continue buying chips from Qualcomm last year after a major royalty settlement, putting the semiconductor chip maker’s products in the lates iPhones.
Qualcomm’s RAN products support several bands of 5G, including millimeter wave connections that require more base stations and have a fairly short range, as well as the slower sub-6 millimeter flavor that can be broadcast over wide regions.
“5G enables a very large expansion of the Qualcomm addressable market, because 5G is going everywhere. It’s going to automotive, it’s going everywhere,” said Qualcomm President Cristiano Amon. “The networking aspects of 5G comes with that transition. It’s a very small incremental investment and it creates an expansion of the Qualcomm addressable market.”
And from a technical perspective, Gordon says Qualcomm looks strong.
“We have a very, very nice uptrend here in Qualcomm,” Gordon said, noting that the stock recently retested a key area of support at around $125. “We should be able to move up” from there, he added.
Qualcomm shares gained 4% on Thursday to close at $126.44, setting the stock up to continue to climb.
What’s also encouraging is Qualcomm’s performance relative to Apple.
Gordon pointed out that during recent declines, Apple’s losses were more in line with the broader market while Qualcomm shares “created a little bit of a divergence” and held strong.
“We’re really seeing some relative strength in Qualcomm to Apple,” Gordon said. “I take that as a bullish sign here. I will likely be adding Qualcomm.”
Qualcomm will report earnings for its latest quarter on November 5. Analysts are anticipating earnings per share of at least $1.18, and Qualcomm historically delivers earnings beats.