Microsoft MSFT is well poised to gain from expanding Azure clientele and growing user base of different applications like Office 365 commercial, Dynamics, and Outlook mobile.
Notably, the company is taking the fight to Amazon AMZN by winning market share in the cloud infrastructure market on the back of Azure’s expanding customer base.
Per Canalys, Microsoft Azure’s market share increased from 14.5% in fourth-quarter 2018, to 17.6% in fourth-quarter 2019. Notably, Azure trails only Amazon Web Services, which has lost ground in the cloud infrastructure market. This is evident from AWS’ market share of 32.4% in fourth-quarter 2019, shrinking from 33.4% in fourth-quarter 2018.
Moreover, ongoing expansion in Microsoft Teams subscriber base is enabling the company in strengthening position in the enterprise communication market against Slack and Zoom.
Despite ongoing uncertainty over the JEDI contract and the coronavirus crisis, the company is well poised to benefit from robust Commercial and cloud computing business. Further, positive trend in PC shipments remains a tailwind.
Notably, the Zacks Consensus Estimate for earnings for fiscal 2020 has improved 5.2% to $5.64 over the past 30 days.
Further, the tech giant currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Why is the Tech Sector Crucial to Investors?
Notably, the tech-laden Nasdaq Composite (IXIC) has been one of the top-performing indices, with more than 31.6% return in the past year. Also, Technology Select Sector SPDR ETF (XLK) has returned 49.4% over the same time, outperforming S&P 500 index’s return of 22.8%.
Technology sector is gaining from strengthening data center market, increasing proliferation of IoT and growing clout of cloud-based applications backed by growing integration of AI and ML technologies.
Anticipated rebound in sales of semiconductors, which are the building blocks of most emerging technologies like AI and IoT, holds promise. Notably, the World Semiconductor Trade Statistics (WSTS) organization projects annual global semiconductor sales to increase 5.9% in 2020.
Further, continuous innovation in electronic devices and major breakthrough developments has led to solid adoption of wearables and smart-connectivity solutions, including smart speakers and virtual reality/ augmented reality (VR/AR) devices.
Moreover, increasing penetration of Internet, accelerated deployment of 5G, and uptick in IT spending, provide plenty of reasons to capitalize on the prospects of this thriving sector. Per Gartner, worldwide IT spending is set to hit $3.9 trillion in 2020, up 3.4% over 2019 tally.
Here we cite a few technology companies with sturdy fundamentals, which sport the same Zacks Rank as Microsoft. Moreover, each of the stocks has outperformed S&P 500 in the past year.
One Year Price Performance
Micron Technology, Inc. MU is gaining from recovery in demand in the memory market. The company is well-poised to benefit from the resurgence in DRAM demand, backed by progress in customer inventory adjustments in the cloud, graphics and the PC markets.
Increasing mix of high-value solutions, enhancement in customer engagement and improvement in cost structure are positives. Growing demand from cloud-computing providers and acceleration in 5G adoption are also positives.
Deceleration in DRAM price declines and improvements in NAND pricing remain tailwinds.
The consensus mark for its earnings for fiscal 2020 has improved 1.7% to $2.43 over the past 30 days.
Perion Network Ltd. PERI is riding on an expanding publisher base, increasing number of unique searches and higher revenues per month (RPM).
Moreover, the company’s search business, Codefuel’s improving revenue trajectory, driven by product innovation and an effective sales effort, holds promise.
Further, acquisition of Content IQ (CIQ), a digital publishing optimization company, aimed at enhancing Perion’s digital branding division, Undertone, is noteworthy. The buyout is expected to enable Undertone to offer more personalized content, as the platform optimizes content to provide a one-to-one user experience and page level engagement.
The consensus mark for its earnings for 2020 has improved 13.6% to 67 cents over the past 30 days.
Amkor Technology, Inc. AMKR is expected to benefit from solid demand for advanced packaging technologies in the consumer and mobile markets.
Moreover, accelerated deployment of 5G, is expected to strengthen the company’s position in the communications market.
Further, momentum across RF module, ADAS infotainment applications and power management areas, are promising.
The Zacks Consensus Estimate for earnings for 2020 has improved 25% to $1.00 over the past 30 days.
Synaptics Incorporated SYNA is well poised to capitalize on its market leading position for both touchpads and secure fingerprint sensors amid positive trends in the PC shipments. New design wins across all the OEM leaders including Dell, HP and Lenovo, deserve a special mention.
Moreover, with respect to the IoT business, ongoing momentum across the automotive segment is encouraging. Further, incremental adoption of the company’s edge SoCs, integrated with AI and embedded neural networks capabilities, for smart video and audio devices is expected to favor financial performance in the days ahead.
The consensus mark for Synaptics’ earnings for fiscal 2020 has improved 44.5% to $5.78 over the past 30 days.
Western Digital Corporation WDC is expected to gain from improving demand for higher capacity enterprise drives and enterprise Solid State Drive (SSD).
Incremental adoption of new additions to data center storage portfolio and other product rollouts is a tailwind. Particularly, growing clout of 20 terabyte (TB) Ultrastar Hard Disk Drive (HDD) and 18TB Ultrastar HDD, remains noteworthy.
Notably, per an analyst quoted by MarketWatch, coronavirus crisis in China is expected to aid the company as it will create a constrained or “tighter” near-term NAND supply, consequently favoring its financial performance.
The consensus mark for its earnings for fiscal 2020 has improved 17.8% to $3.24 over the past 30 days.
Biggest Tech Breakthrough in a Generation
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
Micron Technology, Inc. (MU) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Western Digital Corporation (WDC) : Free Stock Analysis Report
Amkor Technology, Inc. (AMKR) : Free Stock Analysis Report
Perion Network Ltd (PERI) : Free Stock Analysis Report
Synaptics Incorporated (SYNA) : Free Stock Analysis Report
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