AI can train and think inside data centers, but without 5G, it can never leave them. While data centers train the models, run inference, and orchestrate automation, AI’s true application lies in physical AI and the Internet of Things (IoT). The IoT is the collection of connected devices that, as of mid-2026, are growing at an accelerating rate. Estimates of how many devices are currently connected vary but tend to fall in the 20-25 billion range, growing at a mid-teens compound annual growth rate.
5G is critical to AI, edge computing, and the IoT because it enables real-time, ultra-low-latency data processing, massive bandwidth, and scalability. Without it, the IoT is dead in the water, a dream of what the Internet might do one day.
Verizon: Helps Reduce Latency With Verizon 5G Edge
Verizon (NYSE: VZ) is a standout winner in the AI revolution, as it provides the 5G networks critical to AI applications. The company’s many advantages include the Verizon 5G Edge architecture, which pushes data storage and processing to the network edge, near the source, reducing latency to mere milliseconds, and IoT Managed Services, which helps enterprises launch and manage IoT networks. Other advantages include sharded networks, which enable Verizon to isolate smaller networks within the ecosystem, fine-tuning them for specific needs, including private enterprise networks.
The primary catalyst for VZ stock in 2026 is its CEO shift. CEO Dan Shulman is focused on customer satisfaction and revenue quality, and his success is already evident. Early 2026 earnings results included surprise client wins, reduced churn, and improved profitability, with strengths expected to be sustained as the year progresses. Analysts responded favorably to the news, lifting price targets to the high end of the range and firming market support for the stock.
Verizon’s dividend and value combination make it a winner regardless of its 5G position or its CEO's shift in strategy. The company trades at about 11X earnings, with earnings growth forecast. The dividend yield is approximately 5.8% at recent share prices. Share buybacks are also in the mix, providing shareholders with increasing leverage as the share count is reduced annually.
Cloudflare: Reduces Latency, Critical to Agentic AI
Cloudflare (NYSE: NET) is critical to the 5G ecosystem and AI because it acts as an intermediary between websites and the people (or agents) that want to access them. Handling 20% to 25% of all internet traffic, Cloudflare is well-positioned, and its revenue shows it. More importantly, its position and long-term strength are reliable, as it is also critical to AI functionality. Its distributed data center network enables a full stack of services across all its servers, in turn enabling ultra-low-latency operations for end users.
The primary catalyst this year is agentic AI. Not only is Cloudflare’s business underpinned by its own agentic offerings, but the proliferation of agents globally is driving increased internet traffic. The company is building new monetization platforms to handle the loads, which often include sustained spikes in data transmission. The net result is accelerating growth, outperformance, and strengthening stock price targets. Upside, as indicated by consensus, is limited, but trends point to the high-end range and 25% upside from May’s support level.
Broadcom: Broad-Based 5G Support
Broadcom (NASDAQ: AVGO) is critical to 5G and the IoT at all levels, making the chips and much of the critical software infrastructure necessary to enable them. Broadcom’s semiconductor technology ranges from 5G base stations to 5G-enabled devices, with software technology supporting it all. The VMWare acquisition is central to Broadcom’s position, transforming it into a comprehensive platform for telco operators. Its cloud-based platform allows telcos to virtualize hardware, streamline operations, and reduce costs.
Broadcom’s capital return is a testament to the business strength and outlook. The company pays a token dividend, increases it annually, and also buys back shares. The buyback is an operational factor as of mid-2026, following a new $10 billion authorization expected to be completed this year.
Broadcom’s catalysts this year are AI and data centers. The datacenter boom is driving acceleration and outperformance, with 2027 forecast to be another good year. Analysts expect growth expected to sustain at a hyper pace, and the bar is rising. Forecasts for the stock price are also rising, with May revisions pointing to fresh all-time highs, and the market is responding favorably. Q2 price action includes a robust rally and consolidation bearing the hallmarks of a bullish continuation signal. If confirmed, the signal represents more than $120 in upside potential and could push this market toward $550 by Christmas.
The article "AI Can’t Reach the Real World Without These 3 Stocks" first appeared on MarketBeat.
