Is Verizon the next Nvidia?

In the spirit of my weekly “give me five minutes and I’ll solve a business problem,” today I tackle something a little different: a stock price, and specifically that of Verizon . ?Or, of more interest perhaps to the everyday person, which stock out there is likely to soar next? ?The legal fine print: I’m no trader, and I’m operating solely on public information, and giving no recommendations as to what to buy, just my own personal opinion.

There are a whole lot of people who are super happy with themselves for catching some part of the NVIDIA wave. ?I remember when the company was seen as just a chipmaker for games a few short years ago. ?Yes, #esports was booming, but the company's investment in R&D around chips didn’t seem to be paying off in an elevated stock price…yet. ?

Fast forward to today, and we see 1) the importance of #AI, 2) the importance of one company’s (half-lucky, half-strategic) investment, and, 3) even subject to some “market corrections,” how much Wall Street can miss the obvious. So I have to ask, who is the next Nvidia? ?While a lot of people are looking at other chipmakers and nascent industries, I’d like to toss one hat in the ring for some conversation: #verizon. ?And there’s a publicly-known, but very-little-looked-at reason why. ?Bear with me a bit.

Ok, ok, I know. ?But hold your laughter. ?We’ve all seen the 5-year Verizon stock performance graphs, and anyone who held in 2020 has taken a mighty haircut. ?But ask yourself, is the company fundamentally any worse off than it was in 2020, the kind to justify a 50% shave? ?

Sure, competitive forces are steep in the wireless business, and Verizon is among the most expensive, but market shares among the top three services in consumer (Verizon, AT&T , and T-Mobile ) are within a point or two of where they were after the Sprint merger, dating back to Q2 2020. T-Mobile has been on a steady climb since then, with a market cap near twice what AT&T is, yet both AT&T and Verizon have taken massive haircuts. ?Do we really think three companies with roughly status-quo market share should differ in market cap by more than $100 billion? ?So, perhaps current valuations are a bit more?skewed than they should be.

What are the analysts missing? Well, for one, they’re subject to human emotions just like the rest of us (the cold banker stereotype of 高盛 be damned), and skewed perception can change everything. ?They’ve apparently come to the conclusion the differential is warranted. ?Part of me can see why: while I have respect for him, Hans Vestberg just doesn’t inspire the same confidence as Apple 's Tim Cook or 微软 's Satya Nadella. ?(One could also make the argument that Vestberg, along with the executives who have fled in recent years, has been a subpar performer, but I’ll let others make that case, as they did when he was summarily let go from his prior employer, Ericsson.). But Vestberg isn’t why I think Verizon is underrated, nor would a change at the helm, tapping the incredible consumer CEO Sampath, necessarily set off a stock rally. ??

Instead, it all comes down to #5G. ?No, I don’t mean the 5G on your phones today, which in most cases is simply 4GLTE “plus” marketed as 5G by AT&T and T-Mobile first, and then Verizon, or its near-cousin, low-band “cheap” 5G. ?I mean Real 5G. ?The kind that will change the way the world operates as much as people think AI will (and, in fact, make AI a realistic possibility). ?I wrote about this pre-pandemic?but it takes a while for technology to catch up with the imagination. (https://www.cynopsis.com/cyncity/with-5g-your-wireless-provider-is-going-to-change-your-world-and-you-dont-even-know-it/)?(Just ask anyone who’s been working on an algorithmic LLM at OpenAI since the company was founded almost a decade ago.)

But that change will come, and when it comes, it will transform our world. ?Real 5G won’t just enable remote surgery and mass adoption of driverless cars; it won’t just allow data transfers at speeds we can only dream about; it will almost certainly erase the digital divide and empower a hundred million Americans with more opportunity, more growth, and more economic power. ?Think the invention of the steam engine, or rural electrification. ?Every time we’ve enabled the lowest rung on the economic ladder to grow even just a bit, our country’s progress and economic growth have skyrocketed. ?5G is the next kicker. ?

The thing is, not all 5Gs are created equal, and you can’t just create it overnight. ?The three major carriers have been building infrastructure since long before I wrote my op-ed in 2019. ?And no one, based on what I can tell from public information contained in earnings reports, calls, and third-party research, has invested more in 5G infrastructure than Verizon, and no one has invested in a higher quality of it than Verizon. ?As the world turns to the "open air" around them for super-fast internet access, Verizon is poised to be the network of choice, simply because the volume and type of infrastructure investments they’ve made look to deliver the most superior product when you take into account the long view (2027 and beyond).

While #WallStreet is fretting over "net new subscribers" now—and is free to do so—I’m more interested in which wireless provider is building the best castle to open in 2027 and beyond, and how big their moat is. ?My bet is on Verizon, in the same way that Nvidia triumphed over AMD and 英特尔 . ?Of course, component providers shouldn’t be discounted - American Tower , 康宁公司 , 高通 , and their competitors will all see lifts just like Microsoft did as OpenAI took off. ?

But at the end of the day, my bet is that the 4th Industrial Revolution, when in full force, will determine winners based on the mass deployment of high-speed connectivity that enables human productivity without regard to income level, and the company that looks, to my mind, to be the one ready to capture it best is Verizon...even if Wall Street, and the company itself, are not yet making that case.

Of course, this is all just my opinion (and obsession) around "Real 5G." There are a thousand analysts out there trying to crack the same code, a few dozen banks placing bets, and hundreds of journalists on the job. But in all the noise about AI, elections, DEI, and beyond, no one is really having this conversation out loud...and it's about time we started. So my five-minute solution today is to do just that. Welcome to the conversation room.