Technology

5 Tech Stocks to Buy Now as Nasdaq Leadership Continues

Lee Jackson
Alphabet

The search giant continues to expand and is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused on key areas, such as search, advertising, operating systems and platforms, enterprise and hardware products. It generates revenue primarily by delivering online advertising and by selling apps and contents on Google Play, as well as hardware products. The company provides its products and services in more than 100 languages and in 190 countries, regions and territories.

Alphabet offers performance and brand advertising services. 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.

Alphabet provided mixed results, and the analysts said this:

Company reported fourth earnings and the quarter raised concerns around margin compression. Rising traffic acquisition costs and a seasonal spike in sales and marketing expenses drove operating margins below 30%. Despite these factors, 2017 op margins remained at 32%, in-line with 2016, and we think margins could drift modestly higher over time given the investments the company has in place. Top line outperformance continued with 24% revenue growth and we note Google Cloud is now at a $4 billion run rate.

The $1,360 Jefferies price target compares with the $1,256.16 consensus estimate. Shares closed Monday at $1,094.76.

Nvidia

This top chip company has reported strong earnings the past few years and remains a top pick at Jefferies for 2018. Nvidia Corp. (NASDAQ: NVDA) is one of the leaders when it comes to supplying graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles.

Nvidia is also moving into visual computing chips for cars, mobile devices and supercomputers. The company has been able to use its ability to leverage past investments, with a more controlled spending structure ahead on unified, which enables strong cash flow that is allowing a focus on capital return, which is currently estimated to be $1 billion next year.

Top analysts feel the stock is maturing to a platform company from a pure chip company, and Jefferies sees the stock continuing to benefit from four secular trends: virtual reality, PC gaming, chips in the automobile industry and graphic processing units (GPUs) in the cloud.

Once again the company recently shredded earnings expectations, and the analysts explained why:

Nvidia reported this week and beat earnings per share by $0.35. Company guided April quarter sales 17.5% ahead of consensus. Data Center revenues grew >100% for the 7th consecutive quarter. We raise fiscal 2019 estimates by 40% and our new price is 40x our new calendar 2019 EPS estimates. Our new 5 year EPS power target is $15.50, up from $13.

Investors receive a 0.28% dividend. Jefferies raised its price target to $300. The consensus target is $221.58, and shares closed Monday at $235.65.

Salesforce

This top company reported solid fiscal 2018 second-quarter results as billings drastically improved, and Jefferies recently upgraded its rating to Buy. Salesforce.com Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide.

It offers enterprise cloud computing applications and platform services, including Sales Cloud that enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around sales on desktop and mobile devices.

The company also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as connect their service agents with customers on various devices; and Marketing Cloud, which enables companies to plan, personalize and optimize customer interactions.

Historically Salesforce tends to outperform in the first quarter of a calendar year, and with over a month remaining in the quarter for 2018, the stock would be a great pickup on another steep reversal.

The Jefferies price target is $135. The consensus price objective is $124.42, and shares closed on Monday at $122.50.

These five companies dominate their respective silos in the technology sphere and look to continue to do so for years to come. While not suitable for every investor, those looking for growth companies that will continue to grow their business with capital reinvestment and an eye towards the future, these are among the very best.