Many technology stocks have been skyrocketing this year due to a spike in demand for their services based on changing consumer behavior caused by the coronavirus pandemic. The NASDAQ 100 Technology Sector index, which can be seen as a benchmark indicator for the performance of the technology sector, has gained 22.7% year-to-date, versus the S&P 500’s 6.6% return over the same period.
Technology stocks are performing well due to the significant increase in remote shopping and remote working. These trends are expected to continue even after the pandemic subsides, helping technology stocks to perform well in the long run as well.
The offerings of these companies are crucial for the rapid digital transformation taking place all over the world. The businesses investing heavily in the digital transformation to move their activities online, will definitely try to reap the benefits in the long run. So, the demand for the products and services from the technology companies should continue to increase.
Alibaba Group Holding Ltd. (BABA), NVIDIA Corporation (NVDA), Salesforce.com, Inc. (CRM), and Shopify, Inc. (SHOP) have performed pretty well so far in 2020, and are expected to continue to soar in 2021 and beyond.
Alibaba Group Holding Ltd. (BABA)
BABA, frequently called the Amazon of China, is an e-commerce company. The company also provides internet infrastructure, online financial services, internet content services, and so on. BABA’s stock has gained 46% so far this year.
BABA also offers cloud computing services, which is expected to turn profitable in the next few months. Moreover, BABA has recently partnered with Zim, an Israeli shipping company, which provides logistics services to vendors who are selling on Alibaba’s e-commerce portal. BABA has also spent $3.6 billion to acquire a controlling stake in Sun Art, which is a retail chain operating in China.
BABA is expected to witness revenue growth of 51.8% in the fiscal third quarter ending December, 2020, and 38.3% in 2021. The company’s EPS is estimated to grow 25.7% in 2021 and at a rate of 3.5% per annum over the next five years.
How does BABA stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating
NVIDIA Corporation (NVDA)
NVIDIA offers visual computing products and services. The company’s products are meant for gaming, high-performance computing, cloud computing, or automation. NVDA’s stock has gained 132% so far this year.
The company has recently announced the launch of Maxine, which is a video-conferencing platform that is powered by artificial intelligence. NVDA has also partnered with global pharmaceutical giant GSK in an effort to use cutting-edge computing for the process of discovering drugs and vaccines.
NVDA is expected to witness revenue growth of 42% during the fiscal fourth quarter ending January, 2021, and 44.6% in 2021. The company’s EPS is estimated to grow 57.2% in 2021 and at a rate of 17.4% per annum over the next five years.
It’s no surprise that NVDA is rated a “Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade and Industry Rank. In the 86-stock Semiconductor & Wireless Chip industry, it is ranked #15.
Salesforce.com, Inc. (CRM)
CRM’s main offering is cloud computing solutions for customer relationship management. The company operates in the sales force automation, marketing automation, community management, customer services and support, and analytics segments. CRM’s stock has gained 57.4% so far this year.
CRM has recently made several upgrades to its Work.com platform aimed at making it easier for companies to work remotely. This new update includes an employee workspace and helpdesk. The company has also announced Work.com for Vaccines to help with the largest distribution of vaccines in history.
CRM is expected to witness revenue growth of 13.8% during the fiscal fourth quarter ending January 2021, and 21.6% in 2021. The company’s EPS is estimated to grow 25.4% in 2021 and at a rate of 16.7% per annum over the next five years.
CRM’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” in Trade Grade and a “B” in Buy & Hold Grade, Peer Grade, and Industry Rank. In the 48-stock Software – Business industry, it is ranked #6.
Shopify, Inc. (SHOP)
SHOP operates a platform that helps vendors and merchants design, set-up, and manage stores across various sales channels. The company’s platform helps with mobile sales, web sales, brick-and-mortar sales, and pop-up sales. SHOP’s stock price has gained 165.7% so far this year.
SHOP has recently partnered with Alphabet Inc. (GOOGL) in an effort to make Shopify Payments available to US merchants through Buy on Google. This will be the first instance in which Shopify Payments is available outside of Shopify, and will help merchants take advantage of multiple different channels to do business. The company has also partnered with Walmart Inc. (WMT) to allow Shopify merchants to sell their products on Walmart.com.
SHOP is expected to witness revenue growth of 55.3% during the fiscal third quarter ending December, 2020, and 32.4% in 2021. The company’s EPS is estimated to grow 62.8% during the fiscal third quarter ending December, 2020, and at a rate of 108.3% per annum over the next five years.
It’s no surprise that SHOP is rated a “Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, and a “B” in Buy & Hold Grade and Peer Grade. In the 35-stock Internet – Services industry, it is ranked #6.
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BABA shares were trading at $309.50 per share on Wednesday afternoon, down $0.31 (-0.10%). Year-to-date, BABA has gained 45.92%, versus a 8.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...
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