Despite a rocky start to 2021, technology stocks are showing signs of a rebound…
In March, the booming sector fell out of favor as Wall Street investors piled into “reopening stocks,” including restaurants, energy, and travel. This resulted in money managers cutting their tech exposure to record-low levels.
And with this, technology shares tumbled…
But with earnings season well underway, we’re seeing a recovery in the space. The Nasdaq-100 Technology Sector Index is up 13% since the industry’s March lows. The S&P 500 Information Technology Index has rebounded by 12.8%.
This suggests that even with the recent volatility, technology stocks remain strong picks for everyday retail investors.
While many are still lower, they could ultimately surge in the coming months. And as we’re now seeing relatively strong earnings across the board, technology still has plenty of growth tailwinds ahead.
But even if they don’t drastically improve in the near term, many of these companies are set to dominate over the next several years.
No. 4 “Tech Disruptor” Stock
Since its inception in 2009, CEO Jack Dorsey and his team at Square (SQ) have been on a mission to help all 7.8 billion people on Earth participate and thrive in the economy.
The company makes commerce easy with their in-store credit card readers. And it makes the economy more inclusive for everyone with its in-house payments and investing platform, the Cash App – introduced in 2015.
Cash App is one of the fastest growing digital wallets in the U.S. In just two years, from 2018 to 2020, monthly active users more than doubled from 15 million to 36 million.
Not only does the Cash App conveniently allow people to virtually send money to each other through their connected bank accounts for free, it also acts a commission free brokerage platform for trading full or fractional shares of stocks and Bitcoin.
If you can’t afford to buy one share of Amazon.com Inc. (NASDAQ: AMZN) for approximately $3,160 or one Bitcoin for $55,000, then you can use the Cash App to buy as little as $1 worth at a time – completely for free.
Cash App makes money by charging businesses to use their application and individual users transaction fees to access additional services. And in fiscal 2020, Cash App revenues jumped 354% year-over-year from $1.3 billion to $5.9 billion.
After falling 55% with the market during the recent coronavirus correction, SQ stock has significantly outperformed.
Its run from $38 in mid-March to $210 today represents a gain of 452%, bringing it considerably higher than its pre-COVID-19 levels of $83.50 per share.
The fundamentals with Square are strong as analysts are expecting Cash App users to reach 40-45 million by the end of the 2021.
When you combine that with the stock's recent technical momentum, it's fair to expect a substantial increase in 2021.
No. 3 “Tech Disruptor” Stock
From the company’s very inception, Tesla (TSLA) has been at the forefront of pushing disruptive technologies. And despite all odds, Tesla became one of the fastest-growing automobile manufacturers in history.
While electric vehicles have existed to some degree since the invention of the automobile, Tesla pushed them into the mainstream, fueling the industry’s now inevitable shift to electric vehicles.
That’s why the company’s shares have surged nearly 406% over the past twelve months. It’s also why, despite major disruptions to the auto industry, the company was able to report strong financials in its latest quarter…
For the first quarter, Tesla’s earnings per share were $0.93 compared to the anticipated $0.75. And the company’s revenue was $10.39 billion.
While that was a slight miss from Wall Street’s projected $10.48 billion, the firm delivered this revenue even as the global chip shortage shuttered the manufacturing activity of major automakers – including General Motors (GM) and Ford Motor Co. (F).
And despite supply and demand dynamics expected to hurt the industry in the months ahead, Tesla expects demand for its Model S and Model Y vehicles to ramp up in tandem.
No. 2 “Tech Disruptor” Stock
Microsoft (MSFT) is well known as one of the biggest technology companies in the world. It has its hands in everything from operating systems, office software, and cloud services. And while it isn’t necessarily some hidden play in the technology space, the moves the company is making in the video game market are incredible.
In recent months, Microsoft has earned the title “the Netflix of gaming.” Even though news outlets love to make these kinds of comparisons all the time, in this instance, it really is the case.
And it’s expected to fundamentally alter the video game market moving forward…
Over the past year, Microsoft has doubled down on video game cloud services. The company made a monthly subscription model that gives gamers access to more than 150 video game titles, including the company’s flagship games like Halo. And the library continues to grow.
While this was initially exclusive to those that owned the firm’s Xbox consoles, they’ve expanded the service to smartphones, tablets, desktops, and more.
This helped drive MSFT’s latest earnings per share ofo $1.95 compared to the estimated $1.78. It also helped fuel the company’s revenue of $41.7 billion, as the tech giant’s Xbox content and services revenue surged by 34%…
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No. 1 “Tech Disruptor” Stock
Intel (INTC) is a semiconductor company that essentially creates chips that almost every kind of technology in the world relies on to function.
In the company’s most recent quarter, Intel reported earnings per share were $1.39 compared to the expected $1.15. Revenue was $18.6 billion versus the anticipated $17.79 billion.
Intel also predicted that its full-year 2021 earnings per share would be $4.60 compared to its prior guidance of $4.55. Meanwhile, revenue is poised to be about $72.5 billion, greater than its previous outlook of $72 billion.
And while the company has recently benefited from the supply and demand imbalance brought on by the global chip shortage, it has plenty of growth tailwinds ahead.
That’s because Intel is a major player in the cloud computing, data center, and smartphone industries. All of these sectors are becoming increasingly reliant on the latest semiconductors to even handle the sheer amount of data and speed that 5G will bring to the table.
And to capitalize on emerging trends, as well as alleviate some of the world’s semiconductor supply woes, Intel will invest $20 billion to build new chip fabrication plants over the next several years. This means it’ll not only build its own specialized semiconductors but also become a third-party fabricator for other businesses in a high-demand market.
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