The major stock-market indices have recently been in correction mode, with the major tech stocks witnessing a heavy sell-off. The tech-heavy Nasdaq has sunk close to 10% through Friday since September 2nd, after gaining more than 70% since its March low. Rather than an indication of another market crash, this correction is seen as the return of a highly overvalued market to fair levels.
Stocks in the technology sector have mainly borne the brunt of this correction. However, instead of taking this correction as a sign of weakness in the tech sector, this may provide a good opportunity for investors to enter the sector at more reasonable prices.
Technology stocks have been driving the US stock market since the start of the coronavirus pandemic, and there is no reason they shouldn’t do the same going forward. The demand for technology-oriented products is increasing and a widespread digital transformation is underway.
Amazon.com, Inc. (AMZN)
Shares of AMZN have been performing exceptionally well so far this year. The stock has largely gained due to its e-commerce business, which has seen growth in demand due to the spread of the coronavirus and the resultant lockdowns.
AMZN’s cloud computing platform is also in high demand due to digital transformation and more companies shifting their operations to the cloud. AMZN’s stock has delivered a year-to-date price return of 68.6% so far.
The company has recently received approval for the use of drones as part of their delivery operations. This move could help the company make faster deliveries in a more cost-effective manner. The company has also unveiled its Whole foods e-commerce store. As more and more people are looking to do their entire shopping online, AMZN’s online grocery store could not have come at a better time.
AMZN is expected to see a rise in revenue of 31% in the current year and 18% next year. AMZN’s EPS is estimated to grow 37.4% in the current year and at a rate of 36% per annum over the next five years.
How does AMZN stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
A for Industry Grade
B for Overall POWR Rating
The stock is also ranked #1 out of 57 stocks in the Internet – Services industry.
Microsoft Corporation (MSFT)
MSFT has also had a stellar year so far, with its cloud computing platform Azure witnessing a period of high demand. MSFT has also benefited from the spread of the coronavirus since its operating systems and licensed software offer a way for people to work remotely. MSFT’s stock price has risen 29.3% so far this year.
MSFT is set to release its next generation gaming console Xbox before the end of the year, which could lead to a significant uptick in its gaming revenue. The company has entered into an agreement with Nutanix (NTNX) for the integration of the latter’s hybrid cloud infrastructure onto MSFT’s Azure. The company is also making forays into the 5G technology market with its intention to acquire Metaswitch Networks.
MSFT’s revenue is expected to…
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