The Analysts Are Gushing Over These 3 Tech Stocks
Big tech started reporting earnings this week and so far the best word to describe the results is “blowout”. Not only are COVID-19 tailwinds still blowing but secular trends in tech remain strong. What this means for us today is a round of analysts upgrades and price target increases that has us shaking our heads in wonder. In some cases, companies like Microsoft, Google, and Advanced Microdevices are receiving not a single dozen but up to two dozen positive shout-outs from the analyst’s community and that is not a trend to be ignored. We don’t like to play follow-the-leader when it comes to the analysts and their fickle instincts but we absolutely love it when the sell-side community gets behind stocks we already want to own.
Microsoft And The Deflationary Force Of Technology
Microsoft (NASDAQ: MSFT) CEO Satya Nadella called the technology a deflationary force and he’s right. Technology helps with productivity and productivity helps control costs. Whether or not that is driving the business is another story but the business is strong. Microsoft reported a 21.8% increase in revenue over last year’s 12% increase to beat the Marketbeat.com consensus estimate by 295 basis points. Strength was driven by all segments with notable strength in the cloud services that led the company to guide the rest of the year higher.
No less than 14 analysts have come out since the release of earnings and all but one include a price target increase. The one outlier is a fresh price target of $375 which compares to the new consensus of $341. The new Marketbeat.com consensus assumes about 5% of upside in the stock but the high price target is significantly higher. The high price target of $407 was set by Citigroup and assumes more than 30% of upside for the stock. Shares of Microsoft are up nearly 5.0% on the news and trading at a new all-time high.
Google Smashes The Consensus Estimate
Google (NASDAQ: GOOG) was also able to smash through the consensus estimate although it fared a little worse on the cloud-end of the business. The company reported a 41% increase in YOY revenue to beat the consensus by 300 basis points on strength in services. The cloud segment came in as expected while the much smaller and less significant Other category shrank. The key takeaway is that earnings are also well above expectations and have the analysts revising their estimates in a positive fashion.
At least 23 sell-side analysts have come out with commentary on Google and all include a price target increase. There were no upgrades but it might not matter, all 23 ratings are a buy or strong buy with an average sentiment of strong buy. The new consensus is just over $3100 and says the stock is only slightly undervalued at these levels. The high price target, however, implies closer to 25% of upside. Shares of the stock are up more than 6.0% on the news and are trading at a new all-time high.
Advanced Micro Devices Datacenter Business Doubles
Advanced Micro Devices (NASDAQ: AMD) reported a 54% increase in YOY business that was driven by a doubling of its data center business. The company’s revenue, however, was driven by solid gains in all segments and beat the consensus by nearly 500 basis points. In addition, the company raised its full-year outlook to a range above the consensus and that is no surprise. With the global microchip shortage expected to linger long into 2022, there is no reason for a chipmaker not to grow revenue. Regardless, 19 analysts have raised their price target on the stock because of the results including one upgrade to Overweight from Neutral. The new Marketbeat.com consensus has the stock fairly valued trading near $124 but the high price target of $180 assumes about 44% of upside is possible.
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