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Stocks  | March 16, 2020

The pandemic coronavirus has pushed the stocks into bear market territory. All three major indices, namely the Dow Jones, the S&P 500 and the Nasdaq suffered heavy losses on Mar 12 as the panic selling continued unabated.

Per CNBC data, Dow and S&P 500 declined 9.99% and 9.51%, respectively, to record their worst day since Oct 19, 1987 (Black Monday). Moreover, Nasdaq fell 9.43% for its worst day since Apr 14, 2000.

The S&P 500 is now down 26% since hitting an all-time high on Feb 19. The index gained 28.9% in 2019 excluding dividends.

Although the U.S. stock futures indicates chances of a recovery on Mar 13 following a stimulus package from the Federal Reserve and the Bank of Japan, the aggravated pessimism doesn’t bode well for the overall markets.

Notably, the Cboe Volatility Index (VIX), which is often called Wall Street’s “fear gauge”, rose 25% to close at 75.47 on Mar 12 and is unlikely to come down soon.

Tech Stocks to Shield From Market Mayhem

Although the coronavirus-led sell-off has eroded tech stock returns, the sector remains attractive due to consistent digital transformation. Rapid adoption of cloud computing along with the ongoing infusion of AI and machine learning as well as accelerated deployment of 5G technology, blockchain, IoT, autonomous vehicles, AR/VR and wearables are major tailwinds.

Furthermore, the backbone of technology sector — semiconductor industry — is anticipated to make a turnaround this year. According to World Semiconductor Trade Statistics (WSTS), annual global semiconductor sales are expected to witness 5.9% growth in 2020 and 6.3% in 2021.

Additionally, tech companies are cash-rich, providing a cushion to stay afloat despite the current adverse business environment.

Here we discuss five blue-chip tech stocks that have witnessed coronavirus-induced panic sell-off in the past few weeks. However, based on their strong fundamentals and well-established businesses models, these stocks have greater possibility to bounce back quickly once the impact of the coronavirus cools down.

Key Picks

Microsoft MSFT benefits from the rising adoption of its cloud computing platform Azure, which is helping it counter Amazon’s AMZN dominance in the cloud infrastructure market. This Zacks Rank #1 (Strong Buy) stock is also well-poised to gain from a growing user base of different applications like Office 365 commercial, Dynamics and Outlook mobile.

Moreover, Microsoft Teams subscriber base is expected to expand as global enterprises opt for remote-working to restrict the spread of the coronavirus. This in turn, will strengthen its competitive edge in the enterprise communication market against Slack and Zoom.

The Zacks Consensus Estimate for Microsoft’s fiscal 2020 earnings stands at $5.62 per share, indicating 12.8% growth from the year-ago reported figure.

Microsoft Corporation Price and Consensus

Intel INTC is benefiting from its data-centric focus. Strong uptake of its second-gen Xeon scalable processors as well as solid demand from cloud service providers is expected to drive data centric business revenues.

This Zacks #1 Ranked company is planning nine product releases on 10 nm this year. Moreover, it is adding 25% wafer capacity across its 14 nm and 10 nm nodes in 2020.

The Zacks Consensus Estimate for Intel’s 2020 earnings is pegged at $4.97 per share, suggesting growth of 2.1% from the year-earlier reported figure.

Intel Corporation Price and Consensus

SAP SE SAP gains traction from robust adoption of S/4HANA, C/4HANA, Fieldglass, Concur and SuccessFactors Employee Central solutions. The company's alliances with Microsoft, Accenture and Verizon favour business prospects. The company is harnessing the power of machine learning to enhance enterprise applications. This, in turn, is enabling the company to bolster adoption of its solutions and provide clientele with data-driven business insights.

Moreover, with SAP Machine Learning and SAP Leonardo Machine Learning to its credit, this company currently flaunting a Zacks Rank of 1, offers platforms that aid enterprises and users develop robust ML tools in the cloud.

The consensus mark for SAP’s 2020 earnings stands at $6.16 per share, implying growth of 7.7% from the prior-year reported number.

SAP SE Price and Consensus

Apple AAPL is well-poised to benefit from the upcoming 5G upgrade cycle. The iPhone-maker, carrying a Zacks Rank #2 (Buy), is expected to launch its first 5G-supported device later this year. Additionally, a continued momentum in the Services segment, backed by strong App Store sales and the robust acceptance of Apple Music and Apple Pay, are expected to drive growth this year.

Moreover, the company’s wearables market domination is expected to continue in 2020 owing to the strong adoption of AirPods and Apple Watch. The solid uptake of Apple Watch Series 5 is helping the iPhone maker strengthen its presence in the personal health monitor space.

The Zacks Consensus Estimate for Apple’s fiscal 2020 earnings stands at $13.51 per share, hinting at growth of 13.6% from the year-ago reported number.

Apple Inc. Price and Consensus

NVIDIA NVDA is gaining from strong growth in GeForce desktop and notebook GPUs, which is perking up its gaming revenues. Moreover, an uptick in Hyperscale demand is an upside for this Zacks #2 Ranked stock’s data-center business. Additionally, ray-traced gaming, rendering, high-performance computing, AI and self-driving cars are key catalysts.

NVIDIA GPUs are gaining rapid traction from the proliferation of AI. The increasing usage of AI tools in datacenter, automotive, healthcare and manufacturing industries is expected to spur demand for GPUs in the long haul. (Read More: Buy NVIDIA Stock Amid Coronavirus-Driven Sell Off)

The consensus mark for NVIDIA’s fiscal 2021 earnings is pegged at $7.80 per share, indicating a 34.7% surge from the prior-year reported figure.

NVIDIA Corporation Price and Consensus

A revolutionary initiative is helping average Americans find quick and lasting stock market success.

275% in one week on XLF - an index fund for the financial sector. Even 583%, in 7 days on XHB… an ETF of homebuilding companies in the S&P 500. 

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