It is no surprise that the tech stocks have been soaring this year, more than ever, due to the increased dependence of individuals and businesses on technology amid the pandemic. The industry’s unprecedented performance was paused over the past two months owing to concerns related to a second fiscal stimulus and the presidential election. Furthermore, the recent vaccine news from Pfizer, Inc. (PFE) and BioNTech SE (BNTX) led some people to shorting tech stocks with the assumption that the demand for tech offerings will reduce as the virus gets under control. However, in the long run, tech stocks are expected to be a winning sector.
With a rising number of coronavirus cases in the United States, people are expected to spend more time at home. Moreover, many big companies are considering maintaining a ‘work-from-home’ culture even after the pandemic. For example, Twitter, Inc. (TWTR) told its employees they can work from home ‘forever.’
The Robinhood 100 list contains a number of tech stocks, but selecting the fundamentally strong ones is best for your portfolio. Microsoft Corporation (MSFT – Get Rating), Amazon.com, Inc. (AMZN – Get Rating), PayPal Holdings, Inc. (PYPL – Get Rating), and Advanced Micro Devices, Inc. (AMD – Get Rating) certainly fit the bill as we head towards 2021.
Founded in 1975, the Satya Nadella led company MSFT needs no introduction. The Washington-based company develops, licenses, and supports software products, services, and devices worldwide. Its cloud computing arm, Microsoft Azure, is an emerging leader in the field. MSFT is on the Robinhood 100 Most Popular list, with 90% of analyst ratings as a ‘Buy.’
Adapting to the ‘new-normal,’ MSFT delivered strong results for the quarter that ended September 2020. Total revenue increased 12.4% year-over-year to $37.2 billion. Revenue from the intelligent cloud segment increased 19.7% year-over-year to $13 billion, driven by growth in consumption-based services. LinkedIn revenue increased 16% year-over-year, driven by growth in marketing solutions. Net income increased 30.1% year-over-year to $13.9 billion. EPS increased 31.9% year-over-year to $1.82.
Analysts expect MSFT’s revenue to increase 8.9% for the quarter ending December 2020, 10.7% in 2021, and 11.1% in 2022. The company’s EPS is expected to grow 8.6% for the quarter ending December 2020, 17.5% in 2021, and at a rate of 14.5% per annum over the next five years. MSFT’s earnings surprise history looks impressive with the company beating the consensus estimate in each of the trailing four quarters.
MSFT announced a multi-year collaboration with Cooler Screens last month to focus on bringing an immersive digital experience to brick-and-mortar retail environments. Cooler Screens’ retail technology replaces traditional screens with Internet of Things (IoT) enabled high-resolution smart screens. MSFT teamed up with Verizon (VZ) to offer private 5G mobile edge computing. On October 22nd, Honeywell (HON) announced that by leveraging Microsoft Azure, their partnership will drive new levels of productivity for industrial clients. The stock has gained 36% year-to-date, and is currently trading 9.4% below its 52-week high of $232.86, which it hit on September 2nd.
How does MSFT stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
A for Overall POWR Rating
The stock is also ranked #13 out of 96 stocks in the Software – Application industry.
Operating for more than two decades, AMZN is the world’s largest online retailer. The Prime Day held last month generated nearly $3.5 billion in sales. The company also dominates the cloud domain with its Amazon Web Services (AWS). The Jeff Bezos led company also manufactures and sells electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, Echo and Fire phones. AMZN is on the Robinhood 100 Most Popular list having 94% of the analyst ratings as a ‘Buy.’
AMZN’s net sales increased 37.4% year-over-year to $96.1 billion for the third quarter that ended September 2020. Net sales from AWS increased 29% year-over-year to $11.6 billion. North America net sales increased 39.2% year-over-year to $59.4 billion. Net income increased 196.7% year-over-year to $6.3 billion. EPS increased 192.4% year-over-year to $12.37.
Analysts expect AMZN’s revenue to…
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