For Immediate Release
Chicago, IL – September 27, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Qualys QLYS, Vertiv VRT, Dell Technologies DELL, VMware VMW and Zoom Video Communications ZM.
Here are highlights from Tuesday’s Analyst Blog:
Should You Fear Higher Rates? 5 Tech Stocks to Rule Ahead
After a great start to 2023, Wall Street has faltered in the second half as inflation is still hot and rates are likely to remain higher for longer. Though the Fed has stayed put in September, the U.S. central banks indicated that rates will remain higher for longer. No rate cuts are expected in the near term.
Growth stocks that the tech-heavy Nasdaq primarily holds underperform in a rising rate environment. The index-100 ETF Invesco QQQ Trust has declined 1.6% in the past month (as of Sep 22, 2023) while the S&P 500 lost 1.8%.
However, in this article, we will highlight why some tech stocks are still investment-worthy despite higher rates. These are Qualys,Vertiv, Dell Technologies, VMware and Zoom Video Communications.
Is the Worry About Higher Rates Exaggerated?
We believe that no matter if the Fed hikes, pauses or cuts, tech investing will be in fine fettle this year due to the AI boom and the perception that the era of rock-bottom rates is over. Both tech and higher rates are the new normal, and investors are becoming accustomed to it. According to a recent note by Wedbush analyst Dan Ives, the technology sector is poised to weather a prolonged phase of increased interest rates, per a Business Insider article, as quoted on Yahoo Finance.
2023's AI Frenzy Is Not Same As 2000's Tech Bubble
The dramatic rise in big tech companies won't come to an end like what the industry saw after the tech boom of the 1990s, according to some on Wall Street, as quoted on Yahoo. Dan Ives commented that "don't be unnerved by the Federal Reserve's and macroeconomic factors. Instead, focus on the imminent, most significant tech revolution we've seen in three decades," per the above-mentioned article.
He also hinted that any prospective reductions in interest rates — with the market forecasting at least two for the next year — coupled with the ongoing rise of artificial intelligence, could catalyze a "risk-on environment." Jefferies equity analyst Mark Lipacis believes that 1990s saw companies invest in a Field of Dreams-esque. But AI transformation is a hard-core reality.
AI's potential has already boosted the earnings outlook for leading tech firms such as Nvidia, Microsoft, and Adobe. Ives also mentioned that preliminary assessments of corporate IT expenditure show a slight uptick, indicating a favorable trend for software, semiconductors and digital media equities.
Per Nvidia founder & CEO Jensen Huang, demand for its data center platform for AI is huge and broad-based. According to Huang's estimate, the value of data centers within cloud and enterprise software systems is around $1 trillion.
Tech Stocks to Win
Against this backdrop, we have highlighted a few tech stocks that could be up for gains in the near term. These stocks have a Zacks Rank #1 (Strong Buy) or #2 (Buy).
Qualys
Qualys, a Zacks Rank #1 stock, is a provider of cloud security and compliance solutions that enable organizations to identify security risks to their information technology infrastructures help protect their IT systems and applications from cyber-attacks. You can see the complete list of today's Zacks #1 Rank stocks here.
The average earnings surprise for the past four quarters is 14.27%. The Zacks Consensus Estimate for the company's to-be-reported quarter earnings has moved up from $1.05 to $1.13 in the past 60 days.
Vertiv
Zacks #1 Ranked Vertiv Holdings provides digital infrastructure and continuity solutions. It offers hardware, software, analytics and ongoing services.
The average four-quarter earnings surprise is 25.66%. The Zacks consensus estimate for the upcoming quarter has moved up from 34 cents to 43 cents in the past 60 days.
Dell Technologies
Dell Technologies, sporting a Zacks Rank of 1, is a provider of information technology solutions. The company's operating segments include Client Solutions, Enterprise Solutions Group and Dell Software Group.
The average earnings surprise for the past four quarters is 39.52%. The consensus estimate for earnings for the upcoming quarter has moved up from $1.36 to $1.47 in the past 30 days.
VMware
Zacks #2 Ranked VMware is the pioneer in developing core x86 server virtualization software solutions. With innovative virtualization products and cloud-suit solutions, the company is helping businesses in their digital transformation journey.
The average earnings surprise for the past four quarters is 1.15%. The Zacks Consensus Estimate for earnings for the upcoming quarter has moved up from $1.64 to $1.75 in the past 30 days.
Zoom Video Communications
Zoom Video Communications' cloud-native unified communications platform, which combines video, audio, phone, screen sharing and chat functionalities, makes remote working and collaboration easy. Undoubtedly, this Zacks Rank #2 company is benefiting from the work-from-home and online learning wave following the coronavirus pandemic outbreak that forced more and more people to stay home.
The average earnings surprise for the past four quarters is 31.65%. The consensus estimate for earnings for the upcoming quarter has moved up from 94 cents to $1.08 in the past 60 days.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Just Released: Zacks Top 10 Stocks for 2023
In addition to the investment ideas discussed above, would you like to know about our 10 top picks for 2023?
From inception in 2012 through November, the Zacks Top 10 Stocks portfolio has tripled the market, gaining an impressive +884.5% versus the S&P 500’s +287.4%. Our Director of Research has now combed through 4,000 companies covered by the Zacks Rank and handpicked the best 10 tickers to buy and hold in 2023. Don’t miss your chance to still be among the first to get in on these just-released stocks.
See New Top 10 Stocks >>VMware, Inc. (VMW) : Free Stock Analysis Report
Dell Technologies Inc. (DELL) : Free Stock Analysis Report
Qualys, Inc. (QLYS) : Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
Vertiv Holdings Co. (VRT) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
