When Christmas morning rolls around, a lot of people are going to wake up to find something special wrapped and waiting for them under the tree; a 5G-enabled smartphone.

And leading names in the industry like Apple, Google, and Samsung are all duking it out with their own versions of the latest in handheld technology, fighting to provide as many of those cutting-edge gifts as possible.

Together, their efforts are culminating in motion across the whole 5G sector. IDC says about 35.2 million smartphones containing the technology were shipped last year, up 2,289% from 2019.

By 2024, that figure will jump from 2020 levels by another 316% to 146.5 million units.

It’s becoming clear that the wait is over. 5G ultra-broadband cellular technology is finally arriving.

But I believe that’s just scratching the surface. See, 5G is now finding its way into cars, drones, even yachts out on the high seas.

And at the same time, we’re also seeing more installations of specialized equipment needed to handle the new standards.

That sets us up for a great opportunity to invest in a supply firm whose chips are used in a wide range of 5G devices and that’s set to double in less than four years…

5G Arrival

When the construction of 5G towers was delayed, so was the sale of 5G devices. Consumers simply didn’t see much benefit in buying into the new system without the right infrastructure.

But now, all of that is changing quickly with sales of both 5G-capable phones and of 5G infrastructure equipment ramping up. It’s all needed to support the devices embedded with 5G technology, a category that goes way beyond just smartphones.

But the key here is infrastructure sales. After all, without signal, there’s no 5G. So, the 5G tower buildout is crucial.

And it’s here that the forecasts are so promising. Research firm Gartner estimates that global 5G infrastructure revenue will jump by 39% to $19.1 billion this year.

In fact, 5G will account for 39% of all wireless infrastructure revenue in 2021 for developed countries.

As a result, we are seeing 5G being installed across the board. For example, a new generation of 5G-capable portable WiFi routers promise home broadband speeds on the go.

We’re also seeing 5G being integrated into drones, laptops, and cars. Even smart home systems, including security cameras and alarms, are starting to come out with 5G support.

This allows for better camera footage and smarter AI analysis of threats and signals, making the smart home system both safer and more convenient than before.

That’s why I’m excited to introduce you to Marvell Technology Inc. (MRVL). This storied semiconductor company recently gave Wall Street a pleasant surprise when it announced plans to sell devices for data centers and cars.

The Pivot to Infrastructure

This plan marks a huge turnaround for a company that used to be focused on the slower-growing consumer electronics market.

See, Marvell’s history includes a number of consumer firsts. Their technology was a part of the original Apple iPhone, which used a Marvell chip to connect to Wi-Fi. And the first two generations of Google ‘s Chromecast devices ran on Marvell chips, too.

But the company is smartly moving to the much faster-growing infrastructure market. For example, Huawei, Nokia, Ericsson, ZTE, and Samsung all use Marvell chips in their 5G towers and other 5G infrastructure.

This is part of a larger transformation for Marvell. In 2016, 62% of Marvell’s revenue came from the consumer market, with just 38% from infrastructure. Today, those numbers have flipped to 16% of revenues from consumers and a whopping 84% from infrastructure.

That category includes the highly sought-after semiconductor chips used in network buildouts, in computation-heavy machine learning and AI systems, and for data storage in cloud data centers.

Turning Things Around

When hundreds of millions of people around the world started working remotely, these markets exploded. They were already growing quickly beforehand.

Today, Marvell is perfectly positioned to take advantage of the increased spending on 5G infrastructure, 5G-capable devices, smarter cars, and the ever-growing demand for cloud data centers.

It’s no wonder that Investor’s Business Daily reports that at least nine Wall Street analysts raised their price targets on Marvell and listed the stock as a buy.

The newspaper even quoted Rosenblatt Securities analyst Hans Mosesmann as saying that Marvell’s transformation is “one of the biggest turnarounds in the history of Silicon Valley.”

As you’d imagine with all this good news, Marvell stock is on a roll. Since the market rebounded on May 12, MRVL is up 52.7%.

That’s crushing the wider market by 622%. But I still see plenty of upside ahead.

Marvell’s per-share earnings are up 62% in the most recent quarter. If we’re conservative and cut that back by two-thirds, we’d still see earnings double in 3.5 years.

It’s a good example of what I often say: the road to wealth is paved with tech.

Cheers and good investing,

— Michael A. Robinson

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Source: Strategic Tech Investor