Jun 19 will mark the 100th day of the coronavirus pandemic since the WHO officially declared the same on Mar 11. Back then market pundits opined that the bull market in technology that lasted for more than a decade is likely to come to an end as coronavirus spread like wildfire across the country.
However, tech companies proved otherwise with many executives projecting bright outlooks. In fact, stay-at-home orders to curb the spread of the deadly virus has been a blessing in disguise for the tech firms.
The tech sector has remained reasonably unscathed amid the current economic downturn owing the pandemic. This is primarily because investors saw that these companies have been gaining immensely from secular trends like cloud computing and robust telecommunications infrastructure — demand for which skyrocketed amid the health crisis.
Further, with majority of the population trapped at home with an Internet connection, trends including streaming media, video chats with friends and online connections with co-workers have picked up. These trends, in turn, have bolstered the need for newer technologies.
Another factor working in favor of tech shares moving north is the receding threat of regulation. Before the pandemic, policymakers worldwide were devising plans to impose regulations on these companies but this has taken a back seat owing to the pandemic.
Notably, the tech-laden Nasdaq has entered the positive territory for the year on May 11, while the broader S&P 500 and the Dow are still lagging as of mid-June. More importantly, the big techs appear to be doing fine. Apple, Microsoft, Amazon, Alphabet and Facebook collectively were worth $4.8 trillion at the end of the trading session on Mar 10. Currently, their combined valuation stands at nearly $6 trillion. The extra $1 trillion-plus is the confidence that investors showed on big techs amid the pandemic primarily because they have established businesses, which is quite capable of dealing with any economic upheaval.
Apple benefited from momentum in the Services business, strong adoption of Apple Pay and expanding Apple Music subscriber base. Likewise, the new subscription model, Azure, and promising new products continue to generate sizeable cash flow for Microsoft. Amazon, in the meantime, is making the most from its Prime program. At the same time, Alphabet’s strengthening cloud unit is aiding substantial revenue growth, while Facebook profited from increase in mobile ad revenues and growing adoption of Stories by advertisers across Instagram.
Other big players, including Twitter, Tesla, NVIDIA and even Chinese behemoth Alibaba saw their shares surge more than 11% so far this year.
In fact, Netflix, has been one of the top performers of the S&P 500 this year, up more than 30%. It comes as no surprise that Netflix added millions of subscribers as more people remained confined to their homes. The provider of streaming services, in reality, has been expanding subscriber growth for a while now, primarily driven by content strength, focus on originals across various genres and languages, rapid international expansion and partnerships with telcos.
But, its just not big players that have shone amid the pandemic. Smaller tech companies including Zoom Video has made the most of the first 100 days of the pandemic. The stock is currently trading at a record high on expectations of increased use of Zoom’s video conferencing services and products due to the spread of coronavirus, which has been compelling people to stay connected with friends and family, and work from home. Similar players like Slack Technologies had an outstanding April quarter, adding 12,000 new paid customers compared with only 5,000 in each of the earlier two quarters.
Videogame publishers including Electronic Arts and Activision Blizzard to name a few are also on track to hit their respective highs set in 2019 as people hunkered down in their homes looking for entertainment.
What’s more, the government’s recent move to gradually relax shelter-in-place measures has resulted in a record number of new coronavirus cases, which undoubtedly will compel people to spend a lot more time at home, something that bodes well for streaming services, videoconferencing platforms and dominant cloud players, to say the least.
5 Best-Performing Tech Stocks During the 100 Days of COVID-19
As mentioned above, the coronavirus pandemic hasn’t been able to diminish the allure of both big and small tech players. In fact, tech stocks continue to achieve new heights propelling the broader stock market higher.
This calls for keeping an eye on the tech stocks that not only weathered the coronavirus panic but also have the potential to rally.
TSLA Quick Quote TSLA - Free Report
) designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems. The company saw its shares move north by 53.7% from Mar 11 through Jun 18. In fact, the company’s expected earnings growth rate for the current year is more than 100%. Tesla currently carries a Zacks Rank #2 (Buy).
PayPal Holdings, Inc.
PYPL Quick Quote PYPL - Free Report
) has emerged as one of the largest online payment solutions providers on the back of its strong product portfolio. The company’s shares have gained 49.3% from Mar 11 through Jun 18. In fact, the company’s expected earnings growth rate for the next quarter is 37.7%. PayPal Holdings currently carries a Zacks Rank #3 (Hold).
Cadence Design Systems, Inc
CDNS Quick Quote CDNS - Free Report
) offers products and tools that help customers to design electronic products. The company saw its shares move 47.9% north from Mar 11 through Jun 18. In fact, the company’s expected earnings growth rate for the current year is 11.8%. Cadence Design Systems currently carries a Zacks Rank #3.
SPLK Quick Quote SPLK - Free Report
) provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. The company’s shares have surged 38.9% from Mar 11 through Jun 18. In fact, the company’s expected earnings growth rate for the next five years is 26.6%. Splunk currently carries a Zacks Rank #3.
5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.