5 Technology Stocks Poised to Outshine This Earnings Season

Here we pick five tech stocks that are likely to pull off positive earnings surprises this reporting cycle. Read More...

The coronavirus outbreak has had a sector-wide impact. However, the U.S. tech sector has been more resilient compared with other sectors, primarily owing to the ongoing digital transformation and attractive prospects.

According to the latest Earnings Preview, as of May 8, 434 S&P 500 members or 86.8% of the index’s market capitalization have reported their first-quarter 2020 results. Aggregate earnings of these S&P 500 members have declined 10.6% on 1.1% higher revenues.

On the contrary, tech companies in the S&P 500 index, which have reported quarterly results so far, have witnessed a 6.2% rise in earnings on 4.2% revenue growth.

The Tech space displayed its flexibility and earnings power through solid performances of leaders like Microsoft MSFT, Alphabet and Intel. Both Microsoft’s and Alphabet division Google’s results reflected solid demand for cloud-computing services, while Intel’s data-centric businesses drove its first-quarter results.

Contactless payment and delivery services also gained a significant traction amid the coronavirus crisis. Management at Apple stated that Apple Pay was offered to promote and support contactless payments by the likes of Trader Joe’s, Woolworths, Lawson’s, Sainsbury’s, Lidl and Carrefour.

Moreover, online food delivery provider Grubhub GRUB witnessed a solid first quarter as Gross Food Sales and the average order size increased despite the adverse impact of the coronavirus pandemic on its corporate business.

Additionally, social-media companies, namely Facebook, Snap and Twitter, registered growth in traffic and user engagement as more and more people stayed home due to lockdowns and adherence to shelter-at-home guidelines. Nevertheless, the coronavirus mayhem has affected advertising demand and spending, in turn hurting the industry players’ top lines.

Tech Stocks Growth Prospects Look Bright

Although the coronavirus crisis has dampened growth prospects, tech companies are likely to keep benefiting from the rapid adoption of cloud computing, AI, IoT, cloud-based gaming, wearables and drones.

The work-from-home and online learning wave are also key drivers. Furthermore, a solid uptake of AI-infused virtual assistants steadily perks up demand for smart speakers like Amazon Echo and Google Home.

Moreover, the rising preference for online gaming, music and video-streaming services is a major lever.

How to Make the Right Pick?

With the presence of several industry participants, finding the right technology stocks with potential to beat on earnings can be daunting. Our proprietary methodology, however, makes this task fairly simple.

You could narrow down your choices by looking at the stocks that have the perfect combination of the two key elements: a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP is our proprietary methodology for determining the stocks that have the maximum chances of beating estimates at their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

Our research shows that for stocks with this apt mix of ingredients, the odds of a positive earnings surprise are as high as 70%.

Best Bets

Given below are five technology stocks that have a favorable combination to beat on earnings this reporting cycle:

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Anaplan Inc. PLAN is scheduled to report first-quarter fiscal 2021 results on May 26. The company currently flaunts a Zacks Rank of 1 and has an Earnings ESP of +3.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.” data-reactid=”30″>Anaplan Inc. PLAN is scheduled to report first-quarter fiscal 2021 results on May 26. The company currently flaunts a Zacks Rank of 1 and has an Earnings ESP of +3.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate of a loss of 14 cents has remained unchanged over the past month.

Anaplan Inc Price and EPS Surprise

Anaplan Inc price-eps-surprise | Anaplan Inc Quote

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Nutanix Inc. NTNX is set to release third-quarter fiscal 2020 figures on May 27. The company sports a Zacks Rank of 1 and has an Earnings ESP of +1.68%, at present. The Zacks Consensus Estimate has been revised upward from a loss of 88 cents to a loss of 86 cents per share over the past month.” data-reactid=”45″>Nutanix Inc. NTNX is set to release third-quarter fiscal 2020 figures on May 27. The company sports a Zacks Rank of 1 and has an Earnings ESP of +1.68%, at present. The Zacks Consensus Estimate has been revised upward from a loss of 88 cents to a loss of 86 cents per share over the past month.

Nutanix Inc Price and EPS Surprise

Nutanix Inc price-eps-surprise | Nutanix Inc Quote

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="CrowdStrike Holdings Inc. CRWD currently carries a Zacks Rank #2 and has an Earnings ESP of +3.57%. The company is scheduled to report first-quarter fiscal 2021 results on Jun 2. The Zacks Consensus Estimate has remained unrevised at a loss of 6 cents per share over the past month.” data-reactid=”63″>CrowdStrike Holdings Inc. CRWD currently carries a Zacks Rank #2 and has an Earnings ESP of +3.57%. The company is scheduled to report first-quarter fiscal 2021 results on Jun 2. The Zacks Consensus Estimate has remained unrevised at a loss of 6 cents per share over the past month.

CrowdStrike Holdings Inc Price and EPS Surprise

CrowdStrike Holdings Inc price-eps-surprise | CrowdStrike Holdings Inc Quote

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="NVIDIA Corporation NVDA has an Earnings ESP of +0.15% and carries a Zacks Rank of 2 at present. The company is slated to announce first-quarter fiscal 2021 results on May 21. The Zacks Consensus Estimate for earnings remained unchanged at $1.69 per share in the past 30 days.” data-reactid=”77″>NVIDIA Corporation NVDA has an Earnings ESP of +0.15% and carries a Zacks Rank of 2 at present. The company is slated to announce first-quarter fiscal 2021 results on May 21. The Zacks Consensus Estimate for earnings remained unchanged at $1.69 per share in the past 30 days.

NVIDIA Corporation Price and EPS Surprise

NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Baidu BIDU is set to report first-quarter 2020 numbers on May 18. The company has an Earnings ESP of +4.45% and carries a Zacks Rank of 3 currently. The consensus estimate for earnings has been lowered by 14 cents to 64 cents per share in 30 days’ time.” data-reactid=”91″>Baidu BIDU is set to report first-quarter 2020 numbers on May 18. The company has an Earnings ESP of +4.45% and carries a Zacks Rank of 3 currently. The consensus estimate for earnings has been lowered by 14 cents to 64 cents per share in 30 days’ time.

Baidu Inc Price and EPS Surprise

Baidu Inc price-eps-surprise | Baidu Inc Quote

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it’s predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce “”the world’s first trillionaires,”” but that should still leave plenty of money for regular investors who make the right trades early.

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