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The number of smartphone users around the world has been increasing rapidly amid the rising global availability of the Internet. Moreover, manufacturers are also focusing on bringing more users to their fold by offering affordable variants of smartphones while at the same time catering to the premium segment by offering the latest technologies like 5G and powerful processors.
The pandemic last year compelled consumers to hold back on discretionary spending and smartphone sales had to bear the brunt. However, demand for smartphones has been gradually improving and smartphone shipments are now expected to return to its growth path in 2021.
Notably, per a report by the International Data Corporation, smartphone shipments are estimated to grow 5.5% in 2021 and the global smartphone market is expected to witness a CAGR of 3.6% over the forecast period of 2020 to 2025. The report stated that factors like pent-up demand for smartphones and a strong supply-side 5G push will drive this rebound in smartphone shipments this year.
5G Set to Drive Smartphone Sales
5G is set to be one of the primary drivers of growth for the smartphone market this year as it has taken the front seat in terms of technological advancement. This is because 5G technology offers lower latency while ensuring that users enjoy higher speeds. In fact, a report by Research and Markets stated that the number of VoLTE subscriptions, which enables voice and communication services on 5G devices, is expected to account for more than 85% of combined LTE and 5G subscriptions by the end of 2024.
Such a scenario should bolster the sales of 5G smartphones as consumers will look to adopt this advanced technology and take advantage of the many conveniences it provides. Markedly, a report by Gartner predicted 5G smartphone sales to total 539 million units in 2021, accounting for 35% of total smartphone sales. The report stated that the growing availability of 5G networks along with a $200 starting price for 5G smartphones is expected to bolster demand in mature markets and China. Meanwhile, in emerging countries, consumers will look to buy smartphones offering better specifications with 5G as an optional feature. Such positive developments should augur well for smartphone as well as component manufacturers.
4 Stocks to Keep an Eye On
Smartphone shipments are expected to make a comeback this year, thanks to the pent-up demand from last year when the pandemic halted consumers from making such discretionary purchases. Moreover, the rapid adoption of 5G technology is set to drive demand for smartphones. Hence, this seems like a good opportunity to look at names that can make the most of this uptrend going forward. Notably, we have selected four such stocks that carry a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Micron Technology, Inc. MU offers memory and storage products for the smartphone and other mobile-device markets, among others. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 40.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 93.6%.
Jabil Inc. JBL provides engineering capabilities for the development of mobile devices including decorative metals, plastics, coatings; decorative 2.5D, 3D touch displays and so on. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 9.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 74.1%.
Apple Inc. AAPL launched its 5G iPhone lineup, namely iPhone 12, in October 2020. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 36.9%.
QUALCOMM Incorporated QCOM offers processors for mobile devices and its Snapdragon 5G Mobile Platforms feature a comprehensive modem-to-antenna solutions for smartphones. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 2.4% over the past 90 days. The company’s expected earnings growth rate for the current year is 75.4%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
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