We recently compiled a list of the 10 Best 5G Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where American Tower Corporation (NYSE:AMT) stands against the other 5G stocks.
5G, or fifth-generation wireless technology, is the latest evolution in mobile networks, which is designed to significantly improve speed, reduce latency, and enhance the capacity and connectivity of mobile devices. A Market Research Future report estimates that in 2024, the 5G market is projected to be worth $15.03 billion, and by 2032, it could reach $229.41 billion. This rapid increase represents a compound annual growth rate (CAGR) of 40.60% during the forecast period. According to some experts, 5G is one of the most important trends in technology along with artificial intelligence (AI).
5G and AI Could be Catalysts of Global Digital Transformation
In a CNBC interview at the Mobile World Congress Shanghai on June 26, director-general of the GSM Association, Mats Granryd highlighted the deep connection between 5G and AI and suggested that their mutual rise is not accidental. He said that “AI feeds off 5G and 5G feeds off AI.” This is especially evident in China, where the development of standalone 5G networks is well advanced and discussions are already shifting toward 5G Advanced (5.5G). While some countries lag, like the Philippines, Mats pointed out that this dynamic between 5G and AI is most prominent in regions with widespread 5G coverage.
When asked about the rivalry between countries like the U.S. and China in AI and 5G, Mats said that such competition is insignificant. He said that from his experience on the GSMA board, which represents the 25 largest mobile operators globally, the focus is on creating common standards and specifications rather than competing.
He talked about the difficulties of the 2G and 3G eras when different technologies created challenges for global connectivity. The shift to a unified 4G standard was a pivotal moment that laid the foundation for the digital economy.
Mats believes that 5G will follow a similar path to become a common platform worldwide, which will also extend to AI. While some regions may advance faster than others initially, he showed confidence in the fact that everyone will eventually catch up and benefit from the integration of AI with 5G.
Our Methodology
For this article, we used stock screeners and ETFs to identify companies involved in the 5G market. We then selected 10 stocks with the smallest short interest and listed them in descending order of their short interest. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A wide angled view of a high-rise office building, the windows reflecting a nearby cityscape.
American Tower Corporation (NYSE:AMT)
Short Interest as % of Shares Outstanding: 1.09%
Number of Hedge Fund Holders: 63
American Tower Corporation (NYSE:AMT) is a prominent global REIT that manages a vast portfolio of over 224,000 communication sites across 25 countries. This extensive network includes wireless towers, distributed antenna systems, and data centers. The company leases space on these sites to a diverse group of clients, including wireless service providers, media companies, and government agencies. It ranks 5th on our list of the best 5G stocks to buy according to short sellers.
As a major independent player in wireless communications infrastructure, the company is positioned to benefit from the growing demand for data and the expansion of 5G networks. With the increasing investment by carriers in network capacity to support rising mobile data consumption, its broad and scalable infrastructure is ideally suited to meet these needs. The company’s assets are essential for supporting wireless networks as they provide extensive coverage that aligns with the ongoing rollout of 5G technology.
In the second quarter, American Tower (NYSE:AMT) saw a 4.6% year-over-year increase in total property revenue, reaching $2.85 billion. Tenant billings also showed strong growth, rising 6.1% year over year to $119 million. The increase reflects a 5.3% rise in organic tenant billing, amounting to $103 million, driven by the expanding deployment of 5G and higher demand for mobile data services.
According to a study by Next Move Strategy Consulting, North America is expected to lead the global 5G market due to high adoption rates and advanced infrastructure. Their study highlights that 60% of North American consumers are willing to pay more for 5G coverage. It also projects that 5G will add $2.2 trillion to the global economy from 2020 to 2030, with North America expected to benefit significantly. American Tower’s (NYSE:AMT) substantial presence in the U.S. and Canada, with 42,905 communication sites, contributing $1.32 billion in revenue in Q2, makes the company a dominant player in the 5G landscape.
Additionally, its data center segment, CoreSite, reported its second-highest quarter of new business signings, which shows continued growth in this area. Overall, the company’s broad asset base, along with its ability to adapt to industry trends and high demand for connectivity, positions it well for ongoing success.
63 hedge funds had stakes worth nearly $3 billion in American Tower (NYSE:AMT) in the second quarter of 2024. Akre Capital Management owns 6.13 million of the company shares worth $1.2 billion, making it the most significant shareholder of the company as of Q2.
Baron Real Estate Fund stated the following regarding American Tower Corporation (NYSE:AMT) in its first quarter 2024 investor letter:
“Following a more than 30% rebound in the fourth quarter of 2023, shares of American Tower Corporation (NYSE:AMT) lagged in the first quarter of 2024. The uncertainty around the timing and ultimate financial impact of American Tower’s India business sale, ongoing lower overall spending by wireless carriers, and higher interest rates weighed on the company’s shares. Please refer to our “Top Net Purchases” section for our rationale for acquiring additional shares.
In the first quarter, we continued to acquire additional shares of American Tower Corporation, a global operator of over 200,000 wireless towers. We believe that 2023 marked a trough in earnings growth, financing/interest rate headwinds, and valuation bottoming. Looking ahead, we are more optimistic about the company’s prospects due to its: i) accelerating growth expectations; ii) cash flow stability underpinned by core developed markets; iii) secular demand drivers such as growing mobile data usage, 5G spectrum deployment and network investment, edge computing, and connected homes and cars, which will require increased wireless bandwidth and increased spending by the mobile carriers; and iv) strong growth within CoreSite, its network-dense data center company, and optionality with that business segment as future network needs and architecture evolve.”
Overall AMT ranks 5th in our list of the best 5G stocks to buy according to short sellers. While we acknowledge the potential of AMT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.