Qorvo (NASDAQ:QRVO) has staged a remarkable recovery on the stock market since the March crash, rising rapidly over the past few months, thanks to signs of a turnaround in its business amid the novel coronavirus pandemic.

Investors have been upbeat ever since Qorvo released a solid set of results in May. That enthusiasm got another shot in the arm when the company recently released terrific results for the first quarter of fiscal 2021, beating Wall Street's expectations by big margins as demand for its products remained strong on the back of its 5G initiatives.

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The chipmaker's adjusted earnings of $1.50 per share were higher than the prior-year period's figure of $1.36. Revenue increased slightly from $775.6 million a year ago to $787.5 million last quarter. Analysts would have settled for $1.13 per share in earnings on revenue of $729.9 million. Forward guidance also turned out to be much better than what investors were looking for, paving the way for this semiconductor stock to deliver more upside.

Let's take a closer look at what's working for Qorvo.

A hand holding a smartphone representing 5G

Image source: Getty Images.

Better times ahead for Qorvo

Qorvo's fiscal second-quarter guidance indicates that it is about to switch into a higher gear. The company expects $940 million in revenue this quarter at the midpoint of its guidance range. Adjusted earnings are expected at $1.90 per share. Analysts were expecting $1.43 per share in earnings from Qorvo on $799.4 million in revenue.

More importantly, Qorvo's guidance indicates substantial year-over-year growth in revenue and earnings as the company had clocked $1.52 per share in earnings in the year prior on revenue of $807 million. So, Qorvo's top line could jump in the midteens this quarter if it manages to hit the midpoint of the guidance.

Qorvo can sustain this momentum beyond just one quarter for a couple of reasons -- the growing demand for 5G infrastructure and the transition to smartphones supporting the new connectivity standard.

The rollout of 5G networks is giving Qorvo's infrastructure and defense products (IDP) business a nice boost. The segment's revenue increased an impressive 45% year over year to $319 million last quarter, accounting for a record 40% of the total revenue.

The segment's growth was driven by multiple verticals such as Wi-Fi 6, increasing demand for gallium nitride (GaN, a semiconductor component Qorvo manufactures), and the deployment of massive MIMO (multiple-input and multiple-output) technology to support 5G networks. The good news for Qorvo investors is that all three verticals are primed for solid growth.

Cisco estimates that the number of Wi-Fi 6 hotspots could increase 13-fold by 2023. The technology is expected to play an important role in boosting the efficiency of 5G networks by decongesting cellular traffic. Similarly, the demand for GaN semiconductor devices is expected to grow at a healthy pace, as they can improve the power efficiency of 5G base stations.

Qorvo achieved record GaN product revenue last quarter, but this is just the beginning. According to third-party estimates, the market for these devices is expected to clock a compound annual growth rate of 23% through 2024, reaching nearly $1.6 billion in revenue at the end of the forecast period. Qorvo had made early inroads into the GaN market to take advantage of 5G deployments, and it seems to be benefiting from the same now.

Mobile is on the verge of a turnaround

Qorvo's mobile business was its weak link last quarter. The segment's revenue fell nearly 16% year over year to $468 million during the quarter, which isn't surprising as the smartphone market has been in a bad state this year owing to COVID-19. However, Qorvo predicts that the smartphone market will pick up the pace from the current quarter onward due to the launch of new, 5G models.

Qorvo estimates that 5G could add an extra $5 to $7 worth of content to each smartphone, mitigating the impact of lower shipments to some extent. The company forecasts shipments of 250 million 5G smartphone units in 2020, indicating that its addressable market could increase by at least $1 billion because of the new wireless standard.

But this would just be the beginning, as global 5G smartphone shipments are expected to jump to 1.5 billion units by 2025, per third-party estimates. Qorvo is in a good position to take advantage of this growth, thanks to its relationships with leading smartphone players such as Apple, Samsung, and Xiaomi, among others.

Qorvo forecasts $640 million in mobile revenue this quarter as compared with $623 million a year ago -- a small jump. But the quantum of Qorvo's mobile growth should ideally improve in the forthcoming quarters as 5G smartphone adoption gains pace.

Throw in the impressive growth that the company's IDP business is already clocking, and Qorvo looks all set to become a top 5G stock because of the catalysts it is sitting on.