Technology

5 Incredible Mega-Cap Technology Stock Buys for Q2

Intel

This semiconductor leader is grabbing big Internet of Things and data center cloud spending. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide. Its platforms are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.

Intel’s “data-centric” businesses now accounts for about 45% of revenues, versus less than 40% three years ago. The Data Center Group is poised to grow by high-single-digit percentage points over the next few years. In addition, many feel that Intel’s cloud hyperscale customers will continue to spend aggressively on cloud computing infrastructure over the next few years.

The company posted better-than-expected top and bottom line results for the fourth quarter of 2017. It already announced a 10% increase in the dividend as a result of the tax reform changes, and many expect a beefed-up stock buyback program to continue.

Intel investors receive a 2.4% dividend. Merrill Lynch recently raised its price target to $61. The consensus price objective is $53.25, and shares were last seen trading at $52.08.

IBM

This blue chip leader has rallied but still may be offering investors among the best entry point in years. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions, offering a broad portfolio of information technology (IT) hardware, business and IT services, and a full suite of software solutions. The company integrates its hardware products with its software and services offerings in order to provide high-value solutions.

IBM’s five major segments are: 1) Cognitive Solutions, 2) Global Business Services, 3) Technology Services & Cloud Platforms, 4) Systems and 5) Global Financing. Analysts cite the company’s potential in the public cloud as a reason for their positive outlook going forward.

IBM posted better than expected fourth-quarter results, and for the first time in 22 consecutive quarters, revenue declining on a year-over-year basis has ended. Now that streak has finally ended, it looks like a positive sign as the company faces competition from faster-growing companies.

Shareholders receive a 3.8% dividend. The $200 Merrill Lynch price target is well above the consensus target of $170.75. Shares last closed at $153.43 apiece.

Microsoft

This top old-school technology stock has posted all-time highs this year and has a massive $138.6 billion sitting on the balance sheet. Microsoft Inc. (NASDAQ: MSFT) continues to find an increasing amount of support from portfolio managers, who have added the software giant to their holdings at an increasingly faster pace all of this year and last.

Numerous Wall Street analysts feel that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offering. Some have flagged Azure as a solid rival to Amazon’s AWS service. Analysts also maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger users. The cloud was big in the recent earnings report, which was outstanding.

The company has been somewhat quieter on plans for its huge trove of overseas funds, but CEO Satya Nadella surely has big plans for any repatriated money, be it pay off debt, buy back shares, hire employees or spend on research and development.

Microsoft shareholders receive a 1.8% dividend. The $98 Merrill Lynch price target was raised to $106 recently. The consensus price objective is $104.55. Shares closed at $91.27 on Thursday.

These five mega-cap technology giants all pay dividends, are buying back huge amounts of stock and are not under scrutiny for putting users data in jeopardy. With earnings reporting right around the corner, it may make sense to buy partial positions in front of the numbers, on the outside chance they disappoint.