The 5G plays on the stock market are bound to fall if U.S.-China trade negotiators fail to make headway on a trade deal and higher tariffs go into effect, CNBC’s Jim Cramer said Tuesday.
However, the rollout of the fifth-generation of wireless technology, known as 5G, is a secular trend investors will want to buy into regardless, he said.
“At a time like this, we need big apolitical themes that work no matter what, and the best of them should work for years and years and years,” the “Mad Money” host said. “So when these stocks get hit, you buy [them] into weakness because you know they’ll be able to make a comeback as secular growers almost always will.”
American, Chinese and European companies are jockeying to gain an upper hand in building 5G digital cellular networks, which are designed to offer faster connection speeds. Verizon and AT&T are the major 5G device players in the U.S., while Sprint and T-Mobile will be able to compete in the space if the two cellphone companies can complete their expected merger, Cramer said.
As for the chipmakers supplying 5G infrastructure, Cramer recommended Skyworks Solutions, Qorvo, Qualcomm and Marvell Technology as “worth investing for the powerful multiyear theme. You should own one of them.”
“This quarter we’ve seen explosive growth in the 5G wireless cohort. This is the first inning,” he added.
Those U.S. semiconductor companies do a lot of business in China, which means the action of their stocks will swing on trade talks. Still, Cramer said they can be bought.
“What matters to me, though, is not the trade talks but the theme itself. If we don’t get a deal, if there are higher tariffs, well sure, all four of the big 5G chipmakers will see their stocks go lower. But will that mess with the theme? Will it stop 5G? Absolutely not.”