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5 Technology Stocks Poised to Beat Earnings Estimates in Q3
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The technology sector had a strong third-quarter 2023, driven by an improving global macro-economic environment, eased inflation and strong adoption of Artificial Intelligence (AI) and machine learning.
However, the AI mania faded somewhat due to the U.S. Federal Reserve’s hawkish stance. The Federal Reserve enacted one rate hike worth 25 bps in July and kept interest rates steady (Sep 19-20 meeting) at a 22-year high of 5.25-5.5% but signaled one more hike this year.
Nevertheless, the technology sector is expected to have benefited from ongoing digitalization. The rapid adoption of cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology is expected to have aided sector participants.
Higher spending across Software, IT Services and Communications Services is likely to have benefited the technology sector. However, PC and Smartphone segments remained under the weather in the to-be-reported quarter.
Per Gartner’s latest report, 64.3 million PCs were shipped in the third quarter (ended in September) of 2023, down 9% from the year-ago period. Lenovo and Dell Technologies witnessed a decline of 4.4% and 14.2%, respectively, while HP gained 6.4%. Apple witnessed a 24.2% decline, much worse than HP and Dell.
According to Counterpoint’s latest update, global smartphone sales declined 8% year over year but increased 2% sequentially in the third quarter of 2023. Samsung remained the leader in market share, followed by Apple.
Upcoming Earnings to Watch
A chunk of technology companies are set to report their earnings results over the next couple of weeks. We believe that several are well-poised to beat earnings estimates due to a strong product portfolio powered by increasing usage of AI.
Hence, finding technology stocks with the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of 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 stocks that have the best chances to surprise with 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 combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Top Bets
Five technology stocks mentioned below have the right combination of elements to beat on earnings this reporting cycle:
The company is scheduled to report its third-quarter 2023 results on Oct 30. The Zacks Consensus Estimate for earnings has been steady at 21 cents per share over the past 30 days.
Plano, TX-based Intel (INTC - Free Report) has an Earnings ESP of +8.98% and has a Zacks Rank of 2. The company is scheduled to report its third-quarter 2023 results on Oct 26.
The Zacks Consensus Estimate for earnings has increased by a penny to 21 cents per share over the past 30 days.
Mountain View, CA-based Alphabet (GOOGL - Free Report) currently has an Earnings ESP of +3.06% and a Zacks Rank #3.
The company is set to report third-quarter 2023 results on Oct 24. The consensus mark for earnings has been steady at $1.45 per share over the past 30 days.
Menlo Park, CA-based Meta Platforms (META - Free Report) is set to report third-quarter 2023 results on Oct 25. The company has an Earnings ESP of +1.24% and a Zacks Rank of 3.
Image: Bigstock
5 Technology Stocks Poised to Beat Earnings Estimates in Q3
The technology sector had a strong third-quarter 2023, driven by an improving global macro-economic environment, eased inflation and strong adoption of Artificial Intelligence (AI) and machine learning.
However, the AI mania faded somewhat due to the U.S. Federal Reserve’s hawkish stance. The Federal Reserve enacted one rate hike worth 25 bps in July and kept interest rates steady (Sep 19-20 meeting) at a 22-year high of 5.25-5.5% but signaled one more hike this year.
Nevertheless, the technology sector is expected to have benefited from ongoing digitalization. The rapid adoption of cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology is expected to have aided sector participants.
Higher spending across Software, IT Services and Communications Services is likely to have benefited the technology sector. However, PC and Smartphone segments remained under the weather in the to-be-reported quarter.
Per Gartner’s latest report, 64.3 million PCs were shipped in the third quarter (ended in September) of 2023, down 9% from the year-ago period. Lenovo and Dell Technologies witnessed a decline of 4.4% and 14.2%, respectively, while HP gained 6.4%. Apple witnessed a 24.2% decline, much worse than HP and Dell.
According to Counterpoint’s latest update, global smartphone sales declined 8% year over year but increased 2% sequentially in the third quarter of 2023. Samsung remained the leader in market share, followed by Apple.
Upcoming Earnings to Watch
A chunk of technology companies are set to report their earnings results over the next couple of weeks. We believe that several are well-poised to beat earnings estimates due to a strong product portfolio powered by increasing usage of AI.
Hence, finding technology stocks with the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of 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 stocks that have the best chances to surprise with 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 combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Top Bets
Five technology stocks mentioned below have the right combination of elements to beat on earnings this reporting cycle:
San Francisco-based Pinterest (PINS - Free Report) has an Earnings ESP of +4.76% and currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to report its third-quarter 2023 results on Oct 30. The Zacks Consensus Estimate for earnings has been steady at 21 cents per share over the past 30 days.
Pinterest, Inc. Price and EPS Surprise
Pinterest, Inc. price-eps-surprise | Pinterest, Inc. Quote
Phoenix, AZ-based On Semiconductor (ON - Free Report) , also called onsemi, is scheduled to report its third-quarter 2023 results on Oct 30.
The company has an Earnings ESP of +1.00% and a Zacks Rank #2.
The Zacks Consensus Estimate for earnings has remained unchanged at $1.35 per share over the past month.
ON Semiconductor Corporation Price and EPS Surprise
ON Semiconductor Corporation price-eps-surprise | ON Semiconductor Corporation Quote
Plano, TX-based Intel (INTC - Free Report) has an Earnings ESP of +8.98% and has a Zacks Rank of 2. The company is scheduled to report its third-quarter 2023 results on Oct 26.
The Zacks Consensus Estimate for earnings has increased by a penny to 21 cents per share over the past 30 days.
Intel Corporation Price and EPS Surprise
Intel Corporation price-eps-surprise | Intel Corporation Quote
Mountain View, CA-based Alphabet (GOOGL - Free Report) currently has an Earnings ESP of +3.06% and a Zacks Rank #3.
The company is set to report third-quarter 2023 results on Oct 24. The consensus mark for earnings has been steady at $1.45 per share over the past 30 days.
Alphabet Inc. Price and EPS Surprise
Alphabet Inc. price-eps-surprise | Alphabet Inc. Quote
Menlo Park, CA-based Meta Platforms (META - Free Report) is set to report third-quarter 2023 results on Oct 25. The company has an Earnings ESP of +1.24% and a Zacks Rank of 3.
Meta Platforms, Inc. Price and EPS Surprise
Meta Platforms, Inc. price-eps-surprise | Meta Platforms, Inc. Quote
The consensus estimate for its earnings has moved up by 1.1% to $3.57 per share over the past 30 days.