AI’s Energy Hunger Sparks Energy Renaissance
The U.S. Justice Department is set to decide soon whether to approve the $26.5 billion merger of wireless carriers T-Mobile USA and Sprint Corp.
There are leaks that the decision for the merger could be out as early as next week, but regardless, a decision is coming soon.
Federal Communications Commission Chairman Ajit Pai has agreed to support the deal if Boost Mobile is divested, along with some wireless spectrum concessions.
The deal has a good chance of being approved, which will be a big deal. It will be a big deal for our portfolios sooner, rather than later, too!
The CEO of T-Mobile, John Legere, is the best in the business, and as they’ve pushed for the T-Mobile and Sprint merger, one of their largest arguments has been the breadth and speed of the 5G rollout, which will not be nearly as quick or effective if T-Mobile and Sprint remain independent entities.
A combination of the two will spur the roll out of 5G to the next level.
President Trump is a supporter of being the first leading superpower of 5G and its capabilities and broad adoption. The economic growth it’s going to spur will be enormous, and I believe the President is behind this merger, which will set the stage for a huge growth pocket in our economy.
President Trump met with Apple CEO Tim Cook last week, and among part of the conversation was likely a look toward what’s in Apple’s 5G innovative playbook, along with Tim Cook’s insight into the trade war for a strategic roadmap.
Should the T-Mobile and Sprint merger be approved, the roll out for 5G will be far faster and have far better coverage sooner. Given the importance of 5G and getting it rolled out, I like the odds of the deal being approved.
When new networks have been unleashed (1G, 2G, 3G, 4G-Lite), the wireless carrier stockholders are among one of the safest initial groups of beneficiaries. As new network coverage becomes widespread and it becomes widely adopted, the demand for new devices goes parabolic.
I believe the device phase will ramp up in 2020 and have massive growth from 2020-2023. With 5G, the device phase will be far more significant than during any other network upgrade in history, with cloud servers working with IoT (Internet of Things), industrial computing, automotive, warehouse logistics, etc. all being tied to 5G.
As for the smartphone, 5G smartphones, tablets, and computers will begin arriving in mass in 2020, which will be equipped with radio frequency chipsets and memory storage chipsets designed to work specifically with 5G that are non-existent in today’s phones.
The timing isn’t precise, but the outcome is: 5G is coming. And it will create another profit bonanza.
We own some of the big beneficiaries of phase one and two now. While it may seem early for the device phase, the shares in this segment are cheap while the country is mired in 4G and generally unaware of what 5G is going to manifest.
Apple spent $8 billion on research and development in 2015, $11 billion in 2017, over $14 billion for fiscal year 2018, and they are on track to spend even more this year! This is over $6 billion more in incremental R-&-D than just a few years ago as they gear up for the next revolution.
The last time Apple spent this much on R-&-D as a percentage of sales was just before the first smartphone arrived in 2007. 5G is going to be huge. The major players all know it, and they are working hard on it behind closed doors.
We should score big-time because of it – and our portfolios should be big beneficiaries, especially once broad adoption begins to take shape. The next few years are going to be exciting.
Once 5G becomes headline news and the upgrade cycle begins in earnest, it’ll already be greatly priced into the shares. The time to buy is before this all becomes front-page news
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