Do You Have These Top Tech Stocks On Your List? 3 To Watch
Tech stocks are booming in the stock market these days. This is despite the setbacks from a global trade war and a pandemic. How is it that a particular industry is outperforming the rest of the stock market? The S&P 500 Information Technology has been up by 64% since the stock market crash in March. This is about 12% higher than the S&P 500, so it is evident that tech stocks are making impressive gains. Let us look at why top tech stocks are leading the recovery of the stock market in 2020.
The word that comes to mind is adaptability when you think of tech stocks. By responding to the global crisis that is the COVID-19 pandemic, these tech companies were quick to adapt. Tech companies like Microsoft (MSFT Stock Report) have capitalized on this pandemic. In its latest quarterly results announcement yesterday, the company reported that its Xbox content and services revenue increased 30% year on year, as consumers turn to gaming during the pandemic. Another tech giant, Amazon (AMZN Stock Report) has also had a stellar performance in the stock market this year. As more people were forced to stay at home, Amazon was able to cater to this new normal and its demand. Through its Prime subscription, you could have unlimited entertainment and e-commerce shopping at your fingertips.
At the very core of technology, you would have semiconductors powering our tech. So, what is a semiconductor actually? It is a crystalline solid intermediate that is used in the manufacturing of various electronic devices. From diodes and transistors to integrated circuits, they are essential to all things technology. The tech industry would not be where it is today if it were not for the invention of the semiconductor. With that in mind, here are 3 tech stocks that belong to the semiconductor industry to watch.
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Best Tech Stocks To Buy In Q4 2020: Qualcomm
Tech company Qualcomm (QCOM Stock Report) is an established player in the semiconductor industry. Specifically, Qualcomm is an industry leader in manufacturing chipsets for smartphones. Its Snapdragon chipsets represent the pinnacle of performance and efficiency. The company’s flagship Snapdragon 8 series enables OEMs to build industry-leading smartphones and has a strong monopoly over the smartphone industry. The biggest phone manufacturers like Apple (AAPL Stock Report) and Samsung (SSNLF Stock Report) all rely on Qualcomm for its amazing features and top tier performance.
Qualcomm has enjoyed a 42% increase in share price year-to-date. In its third-quarter fiscal posted in July 2020, the company has made a revenue of $4.9 billion and earnings per share of $0.74. The company had also returned $842 million of dividends and repurchases to investors. These are all impressive numbers to boast given the circumstances of the global economy.
The company continues to push its 5G technology to the masses. With the advent of 5G technology, the industry is expected to be worth $667.90 billion by 2026. Qualcomm could be seen as making early investments into the 5G industry. As Apple has recently announced its first batch of 5G iPhones running on Qualcomm chipsets, analysts expect Qualcomm’s net income to increase by 65% in the coming year. With the company making all the right moves, are QCOM stocks worth adding to your portfolio?
Best Tech Stocks To Buy in Q4 2020: NXP Semiconductors
Despite being hit hard by the pandemic in March, NXP Semiconductors (NXPI Stock Report) has made an outstanding return in the stock market. The company has enjoyed a 106% increase in share price since March. NXP is one of the largest manufacturers of semiconductors for the automotive, security, and Internet of Things (IoT) industries. As the pandemic had initially disrupted many of its core markets, things were bleak for the company.
Flash forward to today, the company had posted its third-quarter fiscal in September and has surprised many investors. The financial results were significantly better than the company’s original guidance. This reflected a strong rebound in demand in all of its focus markets. NXP’s revenue was $2.27 billion, flat over a year ago, but represented an impressive 25% increase quarter-over-quarter. The company attributes the improving trends to this strong rebound alongside solid contributions from the ramp of new products.
NXP operates a joint venture with Taiwan Semiconductor Manufacturing (TSM Stock Report) in Singapore. The company is using Taiwan Semiconductor’s latest 5nm processes for its newest chipset. This relationship should help NXP meet its growing demand for its chips without constraining its own manufacturing capacity. With the dawn of the 5G market, the automotive industry will no doubt require more chips per connected vehicle. This sets up NXP for the future market’s demand that will inevitably arrive. Would you consider adding NXPI stocks to your watchlist for this reason?
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Best Tech Stocks To Buy in Q4 2020: Xilinx Inc.
Semiconductor company Xilinx (XLNX Stock Report) develops highly flexible and adaptive processing platforms. With Huawei removed from the picture now due to the trade war, Xilinx’s strength in 5G and data center demand is helping the company make a comeback. Despite a drop of 8% in revenue in its second-quarter fiscal, the company noted an increase of 5% sequentially. This again reflects a rebound in demand for the semiconductor industry in general.
If you dive deeper into Xilinx’s business segments, you will notice that its top performer is its data center segment. Its data center segment had reported a 30% increase year-over-year to $106 million. There is a lot of potential for data centers and this sets Xilinx up for future growth. Xilinx’s share price has had a year-to-date increase of 20%, currently at $122.88 per share.
After weeks of speculation and rumors, Advanced Micro Devices (AMD Stock Report) has announced that it will acquire Xilinx in a $35 billion all-stock transaction. This acquisition can be seen as the 2 chip-making companies pushing against Intel’s monopoly in the data center market. With AMD’s backing, there is certainly a lot of potentials for Xilinx to take the lion’s share of the market. Under the agreement, Xilinx shareholders will get 1.7234 AMD shares for each Xilinx stock they own. Therefore, looking at the closing prices of the two stocks yesterday, the acquisition price represents a 9% premium to XLNX stock. With that in mind, would you consider buying XLNX stocks to take advantage of the price difference?