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The Zacks Analyst Blog Highlights: NVIDIA, Applied Materials, Apple, ServiceNow and Taiwan Semiconductor Manufacturing

Zacks Equity Research

For Immediate Release

Chicago, IL – June 11, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: NVIDIA Corp. NVDA, Applied Materials Inc. AMAT, Apple Inc. AAPL, ServiceNow Inc. NOW and Taiwan Semiconductor Manufacturing Co. Ltd. TSM.

Here are highlights from Wednesday’s Analyst Blog:

5 Must-Buy Tech Stocks as Nasdaq Surpasses 10,000

U.S. stock markets retreated on Jun 9, snapping a six-day winning streak. Both the Dow and the S&P 500 indexes fell sharply. However, the Nasdaq Composite has maintained its pace closing in the positive territory in seven out of last eight trading days. On Jun 9, the tech-laden index achieved a significant milestone of 10,000 for the first time in history.

Nasdaq's Fabulous Rally in Past Two and Half Months

The Nasdaq Composite started rallying since the beginning of 2020 after finishing an impressive 2019 rally of 35.2%. Since then, the index had a dream run attaining fresh highs almost every day. On Feb 19, the tech-laden index reached its all-time high of 9,838.37 after which it took a backward bend on the verge of the coronavirus outbreak.

The tech-heavy index entered into year-to-date negative territory on Feb 25 and then fell in the bear market (characterized as decline of 20% or more from recent high) on Mar 12. The down trend continued till Mar 23. However, from Mar 24, the Nasdaq Composite started moving upward along with both the Dow and the S&P 500. On Apr 14, it finally exited the bear market.

On Jan 9, the Nasdaq Composite rose 0.3% to record a fresh closing high of 9,953.75. Importantly, in intraday trading, the index briefly touched the 10,000 level at 10,002.5 for the first time ever.  The index is up 10.9% year to date and has rallied an astonishing 50.1% during Mar 23 to Jun 9.

Nasdaq Sails Through Tech Sector's Rally

Since the Nasdaq Composite is a tech-heavy index, its performance is directly related to the technology sector. Notably, the sector was feared widely to suffer major setbacks owing to the coronavirus-induced economic disaster. So, its strong growth came as a pleasant surprise to market participants.

Notably, the technology sector is benefiting from continued strong digital transformation. Rising demand for technologically superior products has been a silver lining for this sector in an otherwise tough environment.

The last few years witnessed a series of breakthroughs in cloud computing, predictive analysis, AI, self-driving vehicles, digital personal assistants and IoT, which have set the stage for robust growth. In this regard, large-scale commercial deployment of 5G wireless network has boosted the overall technology sector.

The Technology Select Sector SPDR is the only one among the 11 broad sectors of the S&P 500 index, which ended in green on Jun 9. Meanwhile, the technology sector is the largest gainer of the market's benchmark of which only four broad sectors are in positive year to date. Technology is also the only sector to witness a double-digit rally of 11.7% year to date. Notably, the benchmark index itself is down more than 0.7% year to date.

Our Top Picks

At this stage, it will be prudent to invest in large-cap (market capital > 50 billion) tech stocks with a favorable Zacks Rank. We have narrowed down our search to five such stocks that have strong growth potential for 2020 and robust EPS estimate revisions. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corp. is gaining decent market share among the gaming service providers. The strong line-up of advanced graphics cards has made it a favorite graphics card provider among PC makers. Datacenter presents solid growth opportunity for the company. Its foray into the autonomous vehicles and other automotive electronics space is a positive. NVIDIA’s GPUs are rapidly gaining from the proliferation of artificial intelligence.

The company has an expected earnings growth rate of 36.4% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 2.9% over the past 30 days.

Applied Materials Inc. provides manufacturing equipment, services and software to the semiconductor, display and related industries. Moreover, it has been gaining considerable success in expanding beyond semiconductors. The company is in a very good position to take advantage of the transition from LCD to OLED technology. Rapid growth in large-format TVs has opened up opportunities for Applied Materials.

The company has an expected earnings growth rate of 25.3% for the current year (ending October 2020). The Zacks Consensus Estimate for current-year earnings has improved by 1.9% over the past 30 days.

Apple Inc.'s Services and Wearables businesses are expected to drive top-line growth in fiscal 2020 and beyond. Although Apple’s business primarily runs around its flagship iPhone, the Services portfolio has emerged as its new cash cow. Apple is encouraging developers to use artificial intelligence and machine learning in their apps. Its focus on autonomous vehicles and augmented virtual reality technologies are growth opportunities in the long haul.

The company has an expected earnings growth rate of 3.5% for the current year (ending September 2020) and 23.8% for next year. The Zacks Consensus Estimate for next-year earnings has improved by 0.3% over the last 30 days.

ServiceNow Inc. provides cloud computing services that automate digital workflows to accelerate enterprise IT operations. The company’s Now Platform enables enterprises to enhance productivity by streamlining system processes.

The company is rapidly expanding into non-ITSM (IT service market) areas like human resource and security solutions by launching new products and services. It has an expected earnings growth rate of 27.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 5.2% over the past 30 days.

Taiwan Semiconductor Manufacturing Co. Ltd. is the world's largest dedicated integrated circuit foundry.  It is engaged in manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices. The company has an expected earnings growth rate of 30.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 0.4% over the past 30 days.

Breakout Biotech Stocks with Triple-Digit Profit Potential

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
 
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
 
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
 
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