5 Goldman Sachs Conviction List Tech Stocks Are Solid Q4 Buys
With the third quarter ending, and the final three months of 2018 now in view, many investors are resetting for what could be a more volatile quarter as the midterm elections and ongoing trade issues could stir the pot. One thing is certain, it makes sense to stick with large-cap leaders, especially in sectors like technology, for the rest of 2018 and into 2019.
One of Wall Street’s most respected collections of stocks is the Goldman Sachs Conviction List. These are the firm’s top picks for high net worth and institutional accounts spread across 10 sectors. We screened the list for the technology companies currently residing on it. Then we looked for the large-cap names that Goldman Sachs prefers. These five that look like outstanding choices for investors.
The search giant continues to expand and, while search is king, the cloud presence is growing fast. 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.
The company blew out the latest earnings numbers, and with a wide and bountiful silo of products and services, the stock remains almost unchallenged. It should be noted that traffic acquisition cost relief drove 20% gross profit growth, despite heavy cloud infrastructure and YouTube content investment.
At a recent conference, Google outlined expanding capabilities to facilitate commerce, capitalizing on the “treasure trove” of data provided by seven different properties, each with at least a billion active users (Android, Search, Chrome, Maps, Play, YouTube and Gmail). Smart shopping campaigns leverage machine learning to make sense of touch points along the consumer purchase path, including better offline attribution capabilities (locally oriented searches up 200% over past two years) and improved purchase conversion rates (20% on average).
The Goldman Sachs price target for the stock is $1,450, and the Wall Street consensus target is $1,385.10. The shares closed Thursday trading at $1,207.36.
This is the absolute leader in online retail and a dominant player in cloud storage business, and it remains the top pick on Wall Street. 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.
The company serves developers and enterprises through Amazon Web Services, which provides computing, storage, database, analytics, applications and deployment services that enable virtually various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.
Consistent with data from earlier in 2018, digital marketing users overwhelmingly cited Amazon as the fastest-growing channel for advertising budgets, while many retailers are also leveraging their Amazon advertising data to retarget users on other channels (namely Facebook) to drive traffic/ sales to their own websites (bypassing Amazon marketplace/FBA fees).
Goldman Sachs has a $2,300 price target, and the consensus target is $2,123.77. The stock closed on Thursday at $2,012.98.