With the third-quarter numbers still coming in and quite a few companies left to report, one thing appears to be for sure. The recent volatility derived from a combination of election jitters, the ongoing civil unrest in major U.S. cities, a spike in COVIID-19 cases and, of course, the “sell the news” aspect that always accompanies earnings releases, have put some top technology leaders at levels that look very attractive.
We screened the BofA Securities research coverage universe looking for technology leaders that, for whatever reason, are in a price zone where aggressive growth investors have to be looking to buy some shares. We found four mega-cap technology giants that will not remain on sale forever. While all four are rated Buy at BofA Securities and are outstanding ideas for aggressive growth investors, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This top semiconductor stock has been on fire but was blasted after earnings. Advanced Micro Devices Inc. (NYSE: AMD) operates in two segments: 1) Computing and Graphics, and 2) Enterprise, Embedded and Semi-Custom. Its products include x86 microprocessors as an accelerated processing unit, chipsets, discrete and integrated graphics processing units (GPUs), and professional GPUs, as well as server and embedded processors, and semi-custom system-on-chip products and technology for game consoles.
AMD announced last week that it had reached an agreement to acquire semiconductor maker Xilinx for $35 billion, which would benefit the company’s margins, per-share earnings and free cash flow generation. The company said it expects to achieve operational efficiencies of $300 million within 18 months of the deal closing.
Between the massive purchase and earnings, the shares have been rocked, but the BofA team remains positive:
Idiosyncratic share gainer in highest valued semi markets, solid pipeline, raising our estimates and price target. CPU value share against Intel now at 13% in the third quarter (vs 10% in Q2), we see expansion to 15%/18% in calendar 2012 and 2022. Xilinx M&A is accretive, adds scale, expands total addressable market, though adds regulatory/execution risks.
The BofA Securities price target was raised to $110, which compares with the lower $86.66 Wall Street consensus target. Advanced Micro Devices stock traded at $76.05 Monday morning.
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, and enterprise and hardware products. The company generates revenue primarily by delivering online advertising and by selling apps and content on Google Play, as well as hardware products. Alphabet provides its products and services in more than 100 languages and in 190 countries, regions and territories.
The company 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 analysts point to Google Cloud, which is the largest cloud infrastructure play and engages in more technology, infrastructure research and development in headcount and dollars than any other company. That gives it the strength and wherewithal to compete with and differentiate itself from Amazon’s AWS and Microsoft’s Azure.
Alphabet reported blowout earnings, but some on Wall Street feel that blowout advertising revenues sure won’t help the company in its fight against antitrust allegations. The BofA analysts said this:
Clean beat; Third quarter revenue above Street with search rebounding to +6% vs -10% in the second quarter, and operating expenses below our estimates. Raising estimates; Search should improve with the economy, slower cost growth and buybacks could aid earnings recovery.
The $1,850 BofA Securities price target was lifted to a stunning $2,000. The consensus target is $1,762.90, and Alphabet stock was trading at $1,648.00.