The technology sector has been one of the most reliable bets in the stock market so far this year. The sector has outperformed the broader indices and is poised to gain further with the second wave of coronavirus infections making people more dependent on remote activities.
Most investors might feel that it is best to pick large-cap tech stocks for their portfolios. However, for better returns, it is wise to invest in high-growth stocks irrespective of their size. Your portfolio could comprise of companies across market caps, yet be a winning combination due to their business growth prospects.
One of the favorite picks among large-cap tech stocks has been Apple (AAPL) due to its impressive growth story. However, facts suggest that its growth may have reached a saturation point. While the 5G super cycle seemed to be the biggest trump card for AAPL, its earnings call suggested that the company expects a rather weak 5G iPhone cycle. The company’s latest quarterly results also saw weaker-than-expected iPhone sales and a decline in revenue from China.
The major onus for growth rests on the company’s service segment now. Moreover, with the win of President-elect Joe Biden, APPL might also be embroiled in antitrust lawsuits in times to come.
Hence, investors may want to consider other high-growth technology companies like Facebook, Inc. (FB), NVIDIA Corporation (NVDA), Advanced Micro Devices, Inc. (AMD), and Square, Inc. (SQ). All these companies are making a mark in disruptive technologies like advanced gaming, AI, digital payments, and cryptocurrency.
Facebook, Inc. (FB)
FB connects people through personal computers, mobile devices, virtual reality headsets, and in-home devices worldwide. The company also has a photo-sharing app, Instagram and messaging app, WhatsApp. FB also offers Oculus virtual reality products which allows people to come together and share experiences. The company is also planning to foray into the cryptocurrency market.
In a move to make the platform more secure, FB launched new artificial intelligence (AI)-powered systems to detect misinformation on its platform. The systems leverage several technologies, such as ObjectDNA, which focuses only on specific key objects within the image while ignoring background clutter.
FB’s revenue for the third quarter that ended September 2020, soared 21.6% year-over-year to $21.5 billion, on the back of strong growth in its advertising revenue. Meanwhile, EPS jumped 27.8% over the same period last year to $2.71. The company’s daily active users (DAUs) increased nearly 12% to 1.82 billion. The pandemic situation compelled people to depend on platforms like FB to connect with others for personal or commercial reasons.
FB climbed 31.4% year-to-date to close at $269.70 on Friday. Over the past six months, the stock has gained 17.3%.
The Consensus estimate for revenue for the quarter ending December 2020 is $26.3 billion, indicating a 24.6% year-over-year increase. Analysts also expect EPS to jump 23.8% year-over-year to $3.17.
How does FB stack up for the POWR Ratings?
B for Trade Grade
B for Buy & Hold Grade
A for Industry Rank
B for Overall POWR Rating
FB is also ranked #6 out of 58 stocks in the Internet industry
NVIDIA Corporation (NVDA)
NVDA is one of the leading manufacturers of graphics processing units (or GPUs) that have become increasingly critical in gaming, AI, and autonomous vehicles. The company also has parallel processing capabilities that allows scientists and researchers to conduct high-performance applications with superlative efficiency. Since 2018, NVDA manufactures the Tegra mobile processors for tablets, smartphones, entertainment systems, and automobile navigation.
Last week, NVDA introduced the next generation of NVIDIA® Mellanox® 400G InfiniBand, which empowers AI developers and scientific researchers with a high-speed of networking performance to solve complex global problems.
NVDA’s revenue for the third quarter that ended October 2020 was…
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