With the third-quarter earnings season about to wind down, one thing is for sure. Despite the individual results of the quarter, the top tech stocks that dominate their specific arenas are most likely poised to continue that domination. In a technology world where size and scope often means the difference when confronting rivals and peers, it is clear that the big players will continue to hold and defend their turf.
In a series of new research reports, Jefferies continues to stay the course on the top technology stocks that the firm has rightly championed for some time. While not all the technology picks blew out third-quarter numbers, they all have a sizable advantage in their niche areas, and investors can continue to add shares. These four technology giants are also rated Buy at Jefferies.
The search giant continues to expand and is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) provides online advertising services in the United States, the United Kingdom and rest of the world. It offers performance and brand advertising services, and it operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.
The Google segment also sells hardware products, comprising Chromecast, Chromebooks and Nexus. The Other Bets segment includes businesses such as Access/Google Fiber, Calico, Nest, Verily, GV, Google Capital, X and other initiatives.
The company reported earnings last week against some very tough comparisons from this time last year. Alphabet announced fiscal first quarter results that produced 20% year-on-year growth in revenues to $22.45 billion, in line with most expectations. On a constant-currency basis, revenues grew 23%. Google segment revenues for the quarter were up 20% over the prior year. While Google’s operating profit grew by 16.7%, the operating margin declined by just under 1% basis point.
The Jefferies analysts noted this in the report:
Paid clicks grew 33% year-over-year, beating consensus of 26% and it was the best paid click growth number in years. Mobile search was the #1 revenue driver for the fifth straight quarter We continue to believe online video is the biggest online ad growth driver and YouTube is the premier vehicle to play that trend.
The Jefferies price target for the stock is $1,000. The Wall Street consensus target is $ 965.29. Shares closed last Friday at $819.56.
This company is the absolute leader in online retail and a dominant player in cloud storage business. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers. In addition, the company serves developers and enterprises through Amazon Web Services (AWS), which provides compute, storage, database, analytics, applications and deployment services that enable virtually various businesses.
AWS is the undisputed leader in the cloud now, and many top analysts team see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market. The company has had numerous recent product announcements, including Aurora for relational database engine, Quick Sight for business intelligence and AWS Database Migration Support Service.
Amazon reported a mixed quarter last week, and Jefferies weighed in with this:
Revenues were in line and margins were soft. Guidance was below expectations as the company continues to invest, but the sales midpoint was also below expectations. We’d buy the dip as nothing here changes our view that Amazon is best positioned to benefit from the shift of commerce from offline to online. The ability to deliver fast is differentiated and drives growth in new categories.
Jefferies has a $950 price target. The consensus price objective is $920.02. Shares closed Friday at $775.88.