The coronavirus is changing the world … in more ways than one.
Stay-at-home orders have moved a big portion of our lives online.
We work online. We visit friends and family over the internet. Our kids go to school online. And there have been some unintended consequences…
If you’ve noticed that it takes longer for videos to load or your emails to send, you’re not alone. All of this online activity is placing serious strains on our internet infrastructure.
The issue is bandwidth. Bandwidth refers to the amount of data that can be sent over your internet connection.
Think of it as a pipe transporting water. Just as a larger pipe can move more water, increased bandwidth can move more data.
Before the coronavirus, the internet was capable of meeting bandwidth demand.
But according to Comcast Corp. (Nasdaq: CMCSA), videoconferencing has jumped 212% while streaming video is up 38% during the virus outbreak.
I can certainly attest to that.
I’m using streaming services like Zoom to communicate with my colleagues more.
And with my family confined to our house, my children stay connected with teachers and friends through streaming chat services. Not to mention, we’re certainly watching more online entertainment content. (Thank you, Disney+!)
Here’s why I bring this up: Streaming services consume a lot of bandwidth.
A Problem in the Making Well Before the Coronavirus Crisis
In Europe, regulators have asked YouTube and Netflix Inc. (Nasdaq: NFLX) to purposefully reduce video quality to ease the bandwidth burden on their telecom infrastructure.
But even before the coronavirus hit, internet traffic was set to increase dramatically. Experts predicted that internet traffic from these activities would jump by 117% in just three years. Take a look at the chart below.
Working, learning and entertainment have been steadily shifting online.
That’s why 5G networks were being rolled out … to meet this ever-increasing demand and enable new technologies. 5G networks have much greater bandwidth than current networks, enabling speeds up to 100 times faster.
Now the impact of the coronavirus will put this plan on the fast track. It’s forcing us to adapt in real time instead of gradually.
As a result, major telecom networks have just announced spending increases to roll out 5G networks more quickly.
And this quicker rollout stands to benefit companies that deliver content and other services over the internet, as well as firms that provide computing infrastructure like data centers.
That’s why there is a great opportunity in the Global X Cloud Computing exchange-traded fund (Nasdaq: CLOU).
It holds a variety of companies that deliver streaming entertainment and cloud-based apps for work purposes. It also holds companies that provide the security and infrastructure to deliver cloud-based services.
These are the types of companies that are seeing a boost in activity right now and will profit from the quicker 5G rollout. It’s a perfect combination that could hand you crisis-proof profits.
Best regards,
Research Analyst, The Bauman Letter