7 Technology Stocks That Will Lead the Sector in 2019 in 2019

7 Technology Stocks That Will Lead the Sector in 2019Posted on Monday, March 25th, 2019 by Chris Markoch

No sector suffered the wrath of investors more than the tech sector. When volatility returned to the market, stocks of technology companies dropped. First, it was the FAANG stocks in the summer and then the broader tech selloff in the fourth quarter. Was this a sign that the growth of the sector in 2017 was simply a bubble, or was it the result of a natural, albeit significant, correction? Unlike the early 2000s, this one looks more like a correction and that means there should be some positive growth in the sector for investors who know where to look.

One area to look at is the nascent 5G technology. As smartphone manufacturers look to bring this technology to market in a new generation of smartphones, there are companies that provide the technology that makes these connections work and they will be the winners as this technology moves into the adoption phase. Another area to look at is companies that make their business through cloud services. While some established companies have taken a revenue hit as they moved away from selling the hardware and infrastructure that came with their product, the move towards a subscription base is providing – in many cases – more predictable revenue streams.

And you can’t forget about social media which will continue to expand and change the way customers receive and send information. The company we list in this report may not be the one you expect, but it is one that may have figured out how to monetize its user base.

#1 - NVIDIA (NASDAQ:NVDA)

NVIDIA logo

NVIDIA (NASDAQ: NVDA) - No industry sums up the volatility of the tech sector more than the semiconductor industry. Nvidia’s stock saw a nearly three-year surge that saw it rise nearly 800% come crashing down at the end of 2018. However, the stock is bouncing back. Shares of NVDA are up nearly 22% for the year and just over 12% since March 8. Some of the reason for the stock’s slump was due to the cryptocurrency meltdown, but the extent of the stock’s crash showed a fundamental misunderstanding of the company’s product offerings. The graphic processors that the company designs, while essential for crypto-miners, are far more in demand for video games and datacenters – which include applications for artificial intelligence (AI). Currently, AI applications account for about 25% of Nvidia’s business. That’s where the news gets particularly enticing for investors. At the GTC 2019 conference on March 18, Nvidia CEO Jensen Huang announced the company’s partnership with Toyota Motors. In a nutshell, Nvidia through its DRIVE Constellation simulator is going to provide the technology that will allow Toyota to create virtual simulations which can lead to a rapid acceleration of the company’s testing capabilities while helping to cut costs, increase safety and improve efficiency.



About NVIDIA
NVIDIA Corporation operates as a visual computing company worldwide. It operates in two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming and mainstream PCs; GeForce NOW for cloud-based game-streaming service; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for artificial intelligence (AI) utilizing deep learning, accelerated computing, and general purpose computing; GRID, which provides power of NVIDIA graphics through the cloud and datacenters; DGX for AI scientists, researchers, and developers; and cryptocurrency-specific graphics processing units. The Tegra Processor segment provides processors that are primarily designed to enable branded platforms - DRIVE and SHIELD; DRIVE AGX automotive computers and software stacks, which offer self-driving capabilities; Clara AGX for intelligent medical instruments; SHIELD devices and services designed for mobile-cloud in home entertainment, AI, and gaming applications; and Jetson AGX, an AI computing platform for robotics and other embedded use. The company's products are used in gaming, professional visualization, datacenter, and automotive markets. NVIDIA Corporation sells its products to original equipment manufacturers, original device manufacturers, system builders, add-in board manufacturers, retailers/distributors, Internet and cloud service providers, automotive manufacturers and tier-1 automotive suppliers, mapping companies, start-ups, and other ecosystem participants. The company was founded in 1993 and is headquartered in Santa Clara, California.

Current Price: $186.91
Consensus Rating: Buy
Ratings Breakdown: 25 Buy Ratings, 10 Hold Ratings, 3 Sell Ratings.
Consensus Price Target: $202.0588 (8.1% Upside)

#2 - Workday Inc (NASDAQ:WDAY)

Workday logo

Workday Inc. (NASDAQ: WDAY) - One of the key terms in the tech industry is recurring revenue. This means that instead of customers purchasing equipment for data storage or software, they subscribe to a cloud-based platform. And while Workday isn’t the first company to use the recurring revenue model, they are certainly finding it to be highly effective. Workday helps their customers manage human resources and financial industry needs through a series of cloud-based apps. In the third quarter of 2018, the company saw their subscription revenue increase nearly 35% year-over-year to $324 million. By the end of 2018, they had a subscription revenue backlog of $5.9 billion. Although WDAY is not yet profitable by GAAP standards, their non-GAAP earnings are showing impressive growth on the top and bottom lines. Analysts are projecting revenue growth of over 30% growth in this fiscal year and sales growth of 25%. The company is also generating strong per-share operating profits which grew from $1.03 in 2017 to $1.27 at the end of 2018 and are projected to reach $1.61 for fiscal year 2019. Since the start of 2019, Workday’s stock price is up over 17%.



About Workday
Workday, Inc. provides enterprise cloud applications worldwide. Its applications help its customers to manage critical business functions and optimize their financial and human capital resources. The company offers Workday Financial Management application that provides functions of general ledger, accounting, accounts payable and receivable, cash and asset management, revenue management, and grants management, as well as project and resource management, time and expense tracking, project billing, revenue recognition, financial reporting, and analytics. It also provides Workday Human Capital Management (HCM) application, which includes human resources management, such as workforce lifecycle and organization management, compensation, absence, and employee benefits administration; and global talent management comprising goal and performance management, succession planning, and career and development planning, as well as other HCM solutions, such as Workday Recruiting, Time Tracking, Payroll, and Learning. In addition, the company offers business planning, analytics, and other solutions, including Insights Business Planning Cloud, a solution with built-in intelligence for finance, human resource, and sales teams; Workday Prism Analytics that enables customers to bring together various data with analytics tools for financial and people analytics to make business decisions; Workday Student, a student and faculty lifecycle information system to help colleges and universities; and Workday Data-as-a-Service that provides data to customers to enable informed decision-making. The company serves technology, financial services, business and professional services, healthcare and life sciences, manufacturing, retail and hospitality, education, and government and non-profit industries. The company was formerly known as North Tahoe Power Tools, Inc. and changed its name to Workday, Inc. in July 2005. Workday, Inc. was founded in 2005 and is headquartered in Pleasanton, California.

Current Price: $198.82
Consensus Rating: Hold
Ratings Breakdown: 19 Buy Ratings, 9 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $185.6879 (-6.6% Upside)

#3 - Roku (NASDAQ:ROKU)

Roku logo

Roku (NASDAQ: ROKU) - Roku’s stock is on a tear, climbing nearly 50% in 2019. This has been par for the course for Roku which has given investors more than its share of ups and downs since its initial IPO in 2017. However, the latest surge for Roku started to take shape after their third-quarter earnings were released in 2018. Despite a stellar report, their shares dropped and analysts predicted that shares would continue to decline under the weight of increased expectations. Then Roku did something the market didn’t expect, they beat expectations again. But while that tells you what happened, the real story is understanding why it happened. Simply put, analysts have stopped viewing Roku as simply a player provider (the Roku stick, etc.) which is a commodity – and started seeing its growth as a platform provider. Although the company stood up to competitors like Apple, Amazon and Google – and they continue to show growth in that area - relying on hardware means tight margins and lower profit potential. What the latest earnings report illustrates is that Roku has become a platform provider with subscription revenue and ad revenue – which are the kind of things that boost profits and make investors giddy.  Although there are threats to Roku’s platform service (Disney’s acquisition of Fox being the latest), analysts are projecting a 2 percent growth in revenue in 2019.



About Roku
Roku, Inc. operates a TV streaming platform. The company operates in two segments, Platform and Player. Its platform allows users to discover and access various movies and TV episodes, as well as live sports, music, news, and others. As of December 31, 2018, the company had 27.1 million active accounts. It also provides advertising products, including videos ads, brand sponsorships, and audience marketplace program; and manufactures, sells, and licenses TVs under the Roku TV name. In addition, the company offers streaming media players and accessories under the Roku brand name; and sells branded channel buttons on remote controls. It provides its products and services through retailers and distributors, as well as directly to customers through its Website in the United States, Canada, the United Kingdom, France, the Republic of Ireland, Mexico, and various Latin American countries. The company was founded in 2002 and is headquartered in Los Gatos, California.

Current Price: $61.04
Consensus Rating: Hold
Ratings Breakdown: 8 Buy Ratings, 6 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $67.5067 (10.6% Upside)

#4 - Qualcomm (NASDAQ:QCOM)

QUALCOMM logo

Qualcomm (NASDAQ: QCOM) - One of the key drivers of the tech sector will be the emergence of 5G wireless technology. At present, the network is just getting built out in some major U.S. cities. However, the ultimate application is smartphones, and that’s why Qualcomm is looking good right now. To be clear, QCOM stock is not for the faint of heart. Just last year the stock rose nearly 25% before giving back virtually all its gains as it got caught up in the swoon that fell over the entire tech sector. This year, the stock has not come out of the gate particularly strong, but that is expected to change. The company just introduced their latest 5G cellular modem the Snapdragon X55. Smartphone manufacturers are looking to accelerate the production of 5G smartphones. For example, only the very top of Samsung’s current Galaxy series of smartphones is 5G-enabled. But the one that does uses Qualcomm’s previous generation Snapdragon product. As Samsung looks to roll-out future versions of the Galaxy phones, they will likely all be 5G enabled with Qualcomm technology. In addition to aggressively taking the lead in the mobile processor technology space, Qualcomm should be able to enjoy higher margins.



About QUALCOMM
QUALCOMM Incorporated designs, develops, manufactures, and markets digital communication products worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on code division multiple access (CDMA), orthogonal frequency division multiple access, and other technologies for use in wireless voice and data communications, networking, application processing, multimedia, and global positioning system products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, wideband CDMA, CDMA time division duplex, long term evolution, and/or fifth generation standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including automotive, Internet of things, mobile, data center, and healthcare for supporting the design and introduction of new products and services for voice and data communications, and new industry segments. The company also provides products and services for mobile health; products designed for the implementation of small cells; development, and other services and related products to the United States government agencies and their contractors; and software products, and content and push-to-talk enablement services to wireless operators. In addition, it licenses chipset technology, and products and services for use in data centers. QUALCOMM Incorporated was founded in 1985 and is headquartered in San Diego, California.

Current Price: $85.07
Consensus Rating: Buy
Ratings Breakdown: 18 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $78.00 (-8.3% Upside)

#5 - Keysight Technologies (NYSE:KEYS)

Keysight Technologies logo

Keysight Technologies (NYSE: KEYS) - Keysight Technologies is another company that is benefiting from the commercialization of 5G technology. KEYS makes the testing equipment that offers solutions for the companies that are looking to profit from the development of a 5G network, particularly as 5G engineers look to ensure that all the complexity of 5G connections is addressed before the products reach the market. In fact, Keysight’s 5G toolset was the first to receive approval for 5G device-certification purposes giving it a leg up on competitors as other companies look for products to test their 5G technologies. Keystone has solutions that extend beyond 5G as well. The company has been looked to for testing solutions by a range of companies including network security developers, connected car designers, cloud-computing solutions providers and more. The stock is currently up 30% YTD and the company is projecting 12% earnings growth in 2019 suggesting the stock may still have room to run. 



About Keysight Technologies
Keysight Technologies, Inc. provides electronic design and test solutions to commercial communications, networking, aerospace, defense and government, automotive, energy, semiconductor, and electronic industries in the Americas and the Asia Pacific. Its Communications Solutions Group segment provides radio frequency and microwave test instruments, and electronic design automation software tools; oscilloscopes, logic and serial protocol analyzers, logic-signal sources, arbitrary waveform generators, and bit error rate testers; optical modulation analyzers, component analyzers, power meters, and optical laser source solutions, as well as optical amplifier, filter, and other passive component solutions; and related software solutions. The company's Electronic Industrial Solutions Group segment offers design and design verification tools; and general purpose test and measurement products, such as digital multi-meters, function generators, waveform synthesizers, counters, data acquisition products, audio analyzers, LCR Meters, thermal imaging solutions, low-cost USB modular units, precision source measurement units, ultra-high precision device current analyzers, test executive software platforms, and a range of power supplies. This segment also offers manufacturing systems, such as printed-circuit-board-assembly testers and IC parametric testers; and material analysis products. Its Services Solutions Group segment provides repair, calibration, and consulting services; and remarkets used Keysight equipment, as well as asset management solutions. The company also offers start-up assistance, instrument productivity, and application services, as well as customization, consulting, application, and instrument calibration and repair services. It sells its products through direct sales force, distributors, resellers, and manufacturer's representatives. The company was incorporated in 2013 and is headquartered in Santa Rosa, California.

Current Price: $87.74
Consensus Rating: Buy
Ratings Breakdown: 9 Buy Ratings, 0 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $88.3750 (0.7% Upside)

#6 - FireEye Inc. (NASDAQ:FEYE)

FireEye logo

FireEye Inc. (NASDAQ: FEYE) - Another continuing focus of the technology sector is the issue of information security. FireEye came onto the scene in 2004. Since going public in 2013, it has failed to generate a lot of excitement among investors and it faces competition from a long list of companies highlighted by Palo Alto Networks, Fortinet and Cisco. These competitors have neutralized FEYE’s move from a seller of on-site appliances to a cloud-based service model. This move slowed its revenue growth, but the company expected it to pay off by generating consistent growth via subscriptions. The company went even further and bundled their threat prevention products into a single unified platform called Helix. The thought process was that a bundled platform would help create a moat from which the company could fight off competitors. The company is not yet profitable on a GAAP basis but did post their first quarter of break-even non GAAP earnings in the second quarter of 2018. Although the company is currently posting slower revenue and stock price growth than its leading competitors, the stock trades at a significantly lower price-to-earnings ratio which can make this a good investment for investors looking for a quick profit.



About FireEye
FireEye, Inc. provides cybersecurity solutions that allow organizations to prepare for, prevent, investigate, respond to, and remediate cyber-attacks. The company provides threat detection and prevention solutions, including network security solutions, email security solutions, endpoint security solutions, and customer support and maintenance services. It also offers security orchestration, analytics, and management solutions, such as Central Management System, FireEye Security Orchestrator, and FireEye Helix security operations platform; and threat intelligence subscriptions, such as Dynamic Threat Intelligence cloud, a bi-directional cloud-based service, as well as FireEye Threat Intelligence, a subscription service, which enables organizations to defend against new and emerging cyber threats before an attack is launched. In addition, the company provides on-demand and managed service subscriptions comprising Managed Defense, a technology-enabled managed detection and response service; and Expertise-on-Demand, a subscription that provides access to the company's threat intelligence and expertise as microservices. Further, it offers professional services, including incident response, compromise assessments, and related security consulting services; cyber threat intelligence services; and training services. The company serves telecommunications providers, financial services entities, Internet search engines, social networking sites, stock exchanges, electrical grid operators, networking vendors, oil and gas companies, healthcare and pharmaceutical companies, and governmental agencies. FireEye, Inc. provides its products and services through distributors, resellers, and strategic partners in the United States, the Asia Pacific, Europe, the Middle East, Africa, and other regions. The company was formerly known as NetForts, Inc. and changed its name to FireEye, Inc. in September 2005. FireEye, Inc. was founded in 2004 and is headquartered in Milpitas, California.

Current Price: $15.81
Consensus Rating: Hold
Ratings Breakdown: 5 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $19.5929 (23.9% Upside)

#7 - Twitter (NYSE:TWTR)

Twitter logo

Twitter (NYSE: TWTR) - Although you can hardly go a day without seeing a hashtag the tagging device that has become synonymous with Twitter, the stock and the company is still seen as being the little sibling of the social media space. Facebook has a much larger reach. And Snap has managed to generate a buzz, particularly among the younger demographic to which it is targeted. Like all social media sites, Twitter is navigating the cries for tighter regulation after the 2016 presidential election. One way Twitter is addressing it is to stop reporting monthly active users (MAUs) with their earnings report and instead focusing on monetized daily active users (mDAUs). These are users that engage with Twitter through an app or web browser that can receive ads. Although investors have punished the stock for this, it may be a strategy that is working. Twitter has historically lagged behind its peers in terms of generating ad revenue, but this is showing signs of changing. Another thing working in Twitter’s favor is their active effort to identify and shut down fake accounts. The market seems to agree. The stock is up over 11% in 2019.



About Twitter
Twitter, Inc. operates as a platform for public self-expression and conversation in real time. The company offers various products and services, including Twitter, a platform that allows users to consume, create, distribute, and discover content; and Periscope, a mobile application that enables user to broadcast and watch video live with others. It also provides promoted products and services, such as promoted tweets, promoted accounts, and promoted trends, which enable its advertisers to promote their brands, products, and services. In addition, the company offers a set of tools, public APIs, and embeddable widgets for developers to contribute their content to its platform, syndicate and distribute Twitter content across their properties, and enhance their Websites and applications with Twitter content. Further, it provides subscription access to its public data feed for data partners. The company operates in the United States and internationally. Twitter, Inc. was founded in 2006 and is headquartered in San Francisco, California.

Current Price: $38.48
Consensus Rating: Hold
Ratings Breakdown: 12 Buy Ratings, 19 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $38.4333 (-0.1% Upside)

Technology is always changing which is why technology stocks will always be among the most volatile for investors. As one technology moves out of fashion, another is there to replace it. However, as an investor, it can be hard to keep up with the daily scorecard. And with some stocks, if you miss the initial surge you’ve missed a lot. One way to help ensure you profit from investing in technology stocks is by understanding the underlying trends that will be moving the markets forward and investing in the companies that make those trends happen. In 2019, those trends include 5G, information security, and cloud-based services. And the companies we’ve identified in this report are helping facilitate the development of these technologies into tangible products that consumers will be buying. Take a few minutes to check out these seven stocks and make them a part of your portfolio. Or put them on your MarketBeat watch list and track their performance.



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