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.
5 Technology Stocks Poised to Beat Earnings Estimates in Q1
Read MoreHide Full Article
The technology sector witnessed growth in the first quarter of 2024, driven by strong adoption of AI and machine learning amid persistent inflation that has pushed back chances of an early rate cut by the Federal Reserve.
A challenging global macroeconomic environment due to continuing conflicts in the Middle East and between Russia and Ukraine negatively impacted the sector’s growth trajectory.
Escalating Sino-U.S. tensions has been detrimental to the sector’s prospects. U.S. restrictions on high-tech exports to China, particularly advanced AI chips, have negatively impacted chip providers. Beijing’s strategy to phase out foreign chips in critical industries like telecom is expected to hurt semiconductor giants including Intel and AMD.
Nevertheless, the technology sector benefits from ongoing digitalization. The rapid adoption of cloud computing, 5G, the Internet of Things, wearables, headsets supporting augmented and virtual reality technologies, drones and blockchain is expected to have aided sector participants.
AI demand is escalating, and that has increased the need for data center capacity expansion. Leading cloud computing providers like Amazon, Alphabet, Microsoft and Meta platforms have multi-year investment plans to support greater cloud capacity.
The advent of generative AI has further attracted investments. Large Language Models that form the backbone of generative AI requires significant computational power to process massive amount of data. The growing proliferation of generative AI has boosted the demand for chips, particularly graphics processing units, benefiting semiconductor companies.
Per the Semiconductor Industry Association data, semiconductor sales in February were $46.2 billion, up 16.3% year over year. In January, sales were $47.6 billion, up 15.2% year over year.
Moreover, the PC segment witnessed growth in first-quarter 2024. Per IDC’s latest report, 59.8 million PCs were shipped, up 1.5% from the year-ago period. Lenovo and HP witnessed growth of 7.8% and 0.2%, respectively, while Dell Technologies lost 2.2%.
Upcoming Earnings to Watch
A chunk of technology companies are set to report their earnings results over the next couple of weeks. 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
The 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 first-quarter 2024 results on Apr 24. The Zacks Consensus Estimate for earnings has increased by a penny to 37 cents per share over the past 30 days.
Menlo Park, CA-based Meta Platforms (META - Free Report) is set to report first-quarter 2024 results on Apr 24. The company has an Earnings ESP of +3.26% and a Zacks Rank of 2.
The consensus estimate for its earnings has moved up by 0.9% to $4.31 per share over the past 30 days.
Liberty Lake, WA-based Itron (ITRI - Free Report) has an Earnings ESP of +5.88% and a Zacks Rank of 2. The company is scheduled to report its first-quarter 2024 results on May 2.
The Zacks Consensus Estimate for earnings has been steady at 85 cents per share over the past 30 days.
Hong Kong-based Silicon Motion Technology (SIMO - Free Report) currently has an Earnings ESP of +5.96% and a Zacks Rank #2.
The company is set to report first-quarter 2024 results on May 2. The consensus mark for earnings has declined by a couple of cents to 58 cents per share over the past 30 days.
Silicon Motion Technology Corporation Price and EPS Surprise
Image: Bigstock
5 Technology Stocks Poised to Beat Earnings Estimates in Q1
The technology sector witnessed growth in the first quarter of 2024, driven by strong adoption of AI and machine learning amid persistent inflation that has pushed back chances of an early rate cut by the Federal Reserve.
A challenging global macroeconomic environment due to continuing conflicts in the Middle East and between Russia and Ukraine negatively impacted the sector’s growth trajectory.
Escalating Sino-U.S. tensions has been detrimental to the sector’s prospects. U.S. restrictions on high-tech exports to China, particularly advanced AI chips, have negatively impacted chip providers. Beijing’s strategy to phase out foreign chips in critical industries like telecom is expected to hurt semiconductor giants including Intel and AMD.
Nevertheless, the technology sector benefits from ongoing digitalization. The rapid adoption of cloud computing, 5G, the Internet of Things, wearables, headsets supporting augmented and virtual reality technologies, drones and blockchain is expected to have aided sector participants.
AI demand is escalating, and that has increased the need for data center capacity expansion. Leading cloud computing providers like Amazon, Alphabet, Microsoft and Meta platforms have multi-year investment plans to support greater cloud capacity.
The advent of generative AI has further attracted investments. Large Language Models that form the backbone of generative AI requires significant computational power to process massive amount of data. The growing proliferation of generative AI has boosted the demand for chips, particularly graphics processing units, benefiting semiconductor companies.
Per the Semiconductor Industry Association data, semiconductor sales in February were $46.2 billion, up 16.3% year over year. In January, sales were $47.6 billion, up 15.2% year over year.
Moreover, the PC segment witnessed growth in first-quarter 2024. Per IDC’s latest report, 59.8 million PCs were shipped, up 1.5% from the year-ago period. Lenovo and HP witnessed growth of 7.8% and 0.2%, respectively, while Dell Technologies lost 2.2%.
Upcoming Earnings to Watch
A chunk of technology companies are set to report their earnings results over the next couple of weeks. 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
The five technology stocks mentioned below have the right combination of elements to beat on earnings this reporting cycle:
Westerville, OH-based Vertiv (VRT - Free Report) has an Earnings ESP of +1.24% and currently sports 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 first-quarter 2024 results on Apr 24. The Zacks Consensus Estimate for earnings has increased by a penny to 37 cents per share over the past 30 days.
Vertiv Holdings Co. Price and EPS Surprise
Vertiv Holdings Co. price-eps-surprise | Vertiv Holdings Co. Quote
Menlo Park, CA-based Meta Platforms (META - Free Report) is set to report first-quarter 2024 results on Apr 24. The company has an Earnings ESP of +3.26% and a Zacks Rank of 2.
The consensus estimate for its earnings has moved up by 0.9% to $4.31 per share over the past 30 days.
Meta Platforms, Inc. Price and EPS Surprise
Meta Platforms, Inc. price-eps-surprise | Meta Platforms, Inc. Quote
San Jose, CA-based Cadence Design Systems (CDNS - Free Report) is scheduled to report its first-quarter 2024 results on Apr 22.
The company has an Earnings ESP of +0.22% and a Zacks Rank #2.
The Zacks Consensus Estimate for earnings has been steady at $1.13 per share over the past month.
Cadence Design Systems, Inc. Price and Consensus
Cadence Design Systems, Inc. price-consensus-chart | Cadence Design Systems, Inc. Quote
Liberty Lake, WA-based Itron (ITRI - Free Report) has an Earnings ESP of +5.88% and a Zacks Rank of 2. The company is scheduled to report its first-quarter 2024 results on May 2.
The Zacks Consensus Estimate for earnings has been steady at 85 cents per share over the past 30 days.
Itron, Inc. Price and EPS Surprise
Itron, Inc. price-eps-surprise | Itron, Inc. Quote
Hong Kong-based Silicon Motion Technology (SIMO - Free Report) currently has an Earnings ESP of +5.96% and a Zacks Rank #2.
The company is set to report first-quarter 2024 results on May 2. The consensus mark for earnings has declined by a couple of cents to 58 cents per share over the past 30 days.
Silicon Motion Technology Corporation Price and EPS Surprise
Silicon Motion Technology Corporation price-eps-surprise | Silicon Motion Technology Corporation Quote