We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Bet on These Top 5 Technology Stocks Amid Cooling Inflation
Read MoreHide Full Article
Wall Street witnesses a new big bull as inflation resumes a downward trend. This is evident from the latest Consumer Price Index (“CPI”) report released by the U.S. Bureau of Labor Statistics, which shows that U.S. consumer prices increased less than expected in April 2024.
The CPI rose 0.3% over the previous month and 3.4% over the prior year in April. This indicates a deceleration from March 2024, in which CPI grew 3.5%. Economists are of the view that price pressure will be down gradually and, thus, inflation will eventually incline toward the Federal Reserve’s target of 2%. This, in turn, has raised hopes of investors regarding interest rate cuts by the Fed in September 2024.
Cooling inflation has pushed the stocks to record highs. The S&P 500 index closed at $5,308.15 on Wednesday, exceeding the mark of $5,300 for the first time. The tech-heavy Nasdaq composite surged 1.4%, closing at $16,742.39, whereas the Dow Jones Industrial Average reached the $40,000 milestone, closing at $39,908 yesterday.
Investors looking for growth opportunities should consider investing in technology stocks in the current scenario. The likelihood of interest rate cuts bodes well for growth-oriented tech stocks. Lower interest rates are expected to boost cash inflows, especially free cash flows in the future, which remains crucial for growth-seeking tech stocks. Free cash flows help companies in pursuing acquisitions and investments in technical advancements.
Lower interest rates will reduce the cost of borrowings of the technology companies, which will likely bolster their growth prospects.
In addition, lower inflation will enable enterprises to sign multi-year agreements, which, in turn, will help technology companies win several valuable deals.
Growth Factors Driving Technology Stocks
The growing proliferation of generative AI technology remains a major positive for the technology sector. The ability to interact with humans, respond to questions asked in various languages, generate content, classify data and perform coding on the back of large language models (LLM) are bolstering the adoption of generative AI-backed chatbots.
Increasing adoption of Machine Learning, Augmented Reality/Virtual Reality devices, quantum computing and cloud computing have been contributing well to the performances of the technology companies.
Growing demand for data centers, driven by the need for increasing cloud capacity to support AI-related workloads, is acting as a tailwind. Apart from his, strong momentum across customer relationship software, employee management tools, natural language processing tools, time tracking tools and cyber security software is highly benefiting the software companies.
Technical advancements in Internet infrastructure and the accelerated deployment of 5G technology worldwide are tailwinds. IoT-supported industrial automation, rising PC shipment and growing demand for smart electric appliances, wearables, electric vehicles and drones are other positives.
These stocks sport a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have a Growth Score of A or B, a combination that offers the best opportunities in the growth investing space.
One-Year Price Performance
Image Source: Zacks Investment Research
Alphabet is benefiting from growing generative AI capabilities. It is cashing in on the increasing demand for LLMs with its most powerful AI model called Gemini. Its Google division is gaining from solid momentum in the cloud business. Expanding data centers and strengthening its generative AI-backed cloud portfolio are positives. Google’s improving search engine, on the back of major search updates, and strength in YouTube remain the key catalysts. Alphabet’s deepening focus on the wearables category and expanding presence in the autonomous driving space are other positives.
GOOGL has gained 42.7% over a year. It currently sports a Zacks Rank #1 and has a Growth Score of B. The Zacks Consensus Estimate for 2024 earnings has been revised upward by 11.8% to $7.57 per share in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Datadog is benefiting from strength in customer demand for offerings in modern observability, cloud security, software delivery and cloud service management. The solid adoption of its cloud-based monitoring and analytics platform, owing to the accelerated digital transformation and cloud migration across organizations, remains a plus. Further, a solid cloud partner base, including Google Cloud, Microsoft Azure and Amazon Web Services, is contributing well to its financial performance. The company is witnessing strong customer momentum due to its significant investments in sales and marketing to engage customers, increase brand awareness and drive the adoption of its platform and products.
Datadog has gained 29.8% in the past year. It currently flaunts a Zacks Rank #1 and has a Growth Score of A. The Zacks Consensus Estimate for 2024 earnings has been revised upward by 8.5% to $1.54 per share in the past 60 days.
Garmin is gaining from strong momentum in its Fitness segment, owing to solid demand for its advanced wearables. Also, its expanding adventure watch portfolio is driving its momentum among adventure enthusiasts. Strength in its OEM product categories is benefiting the company’s performance in the aviation industry. In addition, Garmin’s expanding footprint in the automotive space remains a tailwind. Its strong relationship with BMW on the back of its robust domain controllers is a positive.
Garmin has gained 65.7% in the past year. It currently flaunts a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for 2024 earnings has been revised upward by 0.5% to $5.58 per share in the past 60 days.
Salesforce is gaining from a strong demand environment as customers are undergoing a major digital transformation. Its sustained focus on aligning products with customer needs is driving the top line. Continued deal wins in the international market are other growth drivers. The buyout of Slack has positioned the company as a leader in enterprise team collaboration software and improved its competitive standing versus Microsoft Teams. Salesforce’s strategy of continuously expanding generative AI offerings remains a plus.
Salesforce has gained 37.3% in the past year. It currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for fiscal 2025 earnings has been revised upward by 0.3% to $9.71 per share in the past 60 days.
CrowdStrike is benefiting from the solid demand for cyber-security solutions due to a slew of data breaches, and the increasing need for security and networking products amid the growing hybrid working trend. Continued digital transformation and cloud migration strategies adopted by organizations are key growth drivers. The company’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps add users. Additionally, strategic acquisitions, such as Bionic and Reposify, remain noteworthy.
CrowdStrike has gained 150% in the past year. It currently carries a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for fiscal 2025 earnings has been revised upward by 0.5% to $3.90 per share in the past 60 days.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Bet on These Top 5 Technology Stocks Amid Cooling Inflation
Wall Street witnesses a new big bull as inflation resumes a downward trend. This is evident from the latest Consumer Price Index (“CPI”) report released by the U.S. Bureau of Labor Statistics, which shows that U.S. consumer prices increased less than expected in April 2024.
The CPI rose 0.3% over the previous month and 3.4% over the prior year in April. This indicates a deceleration from March 2024, in which CPI grew 3.5%. Economists are of the view that price pressure will be down gradually and, thus, inflation will eventually incline toward the Federal Reserve’s target of 2%. This, in turn, has raised hopes of investors regarding interest rate cuts by the Fed in September 2024.
Cooling inflation has pushed the stocks to record highs. The S&P 500 index closed at $5,308.15 on Wednesday, exceeding the mark of $5,300 for the first time. The tech-heavy Nasdaq composite surged 1.4%, closing at $16,742.39, whereas the Dow Jones Industrial Average reached the $40,000 milestone, closing at $39,908 yesterday.
Investors looking for growth opportunities should consider investing in technology stocks in the current scenario. The likelihood of interest rate cuts bodes well for growth-oriented tech stocks. Lower interest rates are expected to boost cash inflows, especially free cash flows in the future, which remains crucial for growth-seeking tech stocks. Free cash flows help companies in pursuing acquisitions and investments in technical advancements.
Lower interest rates will reduce the cost of borrowings of the technology companies, which will likely bolster their growth prospects.
In addition, lower inflation will enable enterprises to sign multi-year agreements, which, in turn, will help technology companies win several valuable deals.
Growth Factors Driving Technology Stocks
The growing proliferation of generative AI technology remains a major positive for the technology sector. The ability to interact with humans, respond to questions asked in various languages, generate content, classify data and perform coding on the back of large language models (LLM) are bolstering the adoption of generative AI-backed chatbots.
Increasing adoption of Machine Learning, Augmented Reality/Virtual Reality devices, quantum computing and cloud computing have been contributing well to the performances of the technology companies.
Growing demand for data centers, driven by the need for increasing cloud capacity to support AI-related workloads, is acting as a tailwind. Apart from his, strong momentum across customer relationship software, employee management tools, natural language processing tools, time tracking tools and cyber security software is highly benefiting the software companies.
Technical advancements in Internet infrastructure and the accelerated deployment of 5G technology worldwide are tailwinds. IoT-supported industrial automation, rising PC shipment and
growing demand for smart electric appliances, wearables, electric vehicles and drones are other positives.
Given this booming scenario, it is prudent for investors to place bets on tech companies such as Alphabet (GOOGL - Free Report) , Datadog (DDOG - Free Report) , Garmin (GRMN - Free Report) , Salesforce (CRM - Free Report) and CrowdStrike (CRWD - Free Report) for superb returns.
These stocks sport a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have a Growth Score of A or B, a combination that offers the best opportunities in the growth investing space.
One-Year Price Performance
Image Source: Zacks Investment Research
Alphabet is benefiting from growing generative AI capabilities. It is cashing in on the increasing demand for LLMs with its most powerful AI model called Gemini. Its Google division is gaining from solid momentum in the cloud business. Expanding data centers and strengthening its generative AI-backed cloud portfolio are positives. Google’s improving search engine, on the back of major search updates, and strength in YouTube remain the key catalysts. Alphabet’s deepening focus on the wearables category and expanding presence in the autonomous driving space are other positives.
GOOGL has gained 42.7% over a year. It currently sports a Zacks Rank #1 and has a Growth Score of B. The Zacks Consensus Estimate for 2024 earnings has been revised upward by 11.8% to $7.57 per share in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Datadog is benefiting from strength in customer demand for offerings in modern observability, cloud security, software delivery and cloud service management. The solid adoption of its cloud-based monitoring and analytics platform, owing to the accelerated digital transformation and cloud migration across organizations, remains a plus. Further, a solid cloud partner base, including Google Cloud, Microsoft Azure and Amazon Web Services, is contributing well to its financial performance. The company is witnessing strong customer momentum due to its significant investments in sales and marketing to engage customers, increase brand awareness and drive the adoption of its platform and products.
Datadog has gained 29.8% in the past year. It currently flaunts a Zacks Rank #1 and has a Growth Score of A. The Zacks Consensus Estimate for 2024 earnings has been revised upward by 8.5% to $1.54 per share in the past 60 days.
Garmin is gaining from strong momentum in its Fitness segment, owing to solid demand for its advanced wearables. Also, its expanding adventure watch portfolio is driving its momentum among adventure enthusiasts. Strength in its OEM product categories is benefiting the company’s performance in the aviation industry. In addition, Garmin’s expanding footprint in the automotive space remains a tailwind. Its strong relationship with BMW on the back of its robust domain controllers is a positive.
Garmin has gained 65.7% in the past year. It currently flaunts a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for 2024 earnings has been revised upward by 0.5% to $5.58 per share in the past 60 days.
Salesforce is gaining from a strong demand environment as customers are undergoing a major digital transformation. Its sustained focus on aligning products with customer needs is driving the top line. Continued deal wins in the international market are other growth drivers. The buyout of Slack has positioned the company as a leader in enterprise team collaboration software and improved its competitive standing versus Microsoft Teams. Salesforce’s strategy of continuously expanding generative AI offerings remains a plus.
Salesforce has gained 37.3% in the past year. It currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for fiscal 2025 earnings has been revised upward by 0.3% to $9.71 per share in the past 60 days.
CrowdStrike is benefiting from the solid demand for cyber-security solutions due to a slew of data breaches, and the increasing need for security and networking products amid the growing hybrid working trend. Continued digital transformation and cloud migration strategies adopted by organizations are key growth drivers. The company’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps add users. Additionally, strategic acquisitions, such as Bionic and Reposify, remain noteworthy.
CrowdStrike has gained 150% in the past year. It currently carries a Zacks Rank #2 and a Growth Score of A. The Zacks Consensus Estimate for fiscal 2025 earnings has been revised upward by 0.5% to $3.90 per share in the past 60 days.