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Tech stocks have not had an easy run lately. However, Microsoft (MSFT) – Get Report and many other mega-cap holdings have been holding up pretty well,
Largely speaking, Microsoft, Apple (AAPL) – Get Report, Amazon (AMZN,) – Get Report and other FAANG and large tech companies surged into the end of summer and topped out in early September.
Over on Real Money, Jim Cramer says it’s reassuring that FAANG plus Microsoft are showing signs of life, “because those stocks actually got cheap versus a giant new cohort of newly minted stocks to choose from.” Read more of Cramer’s insights and learn how to profit from his ideas.
Most of these stocks have been consolidating, although some have made new highs. However, Microsoft has been slowly but surely grinding its way higher, wrote TheStreet’s Bret Kenwell.
Shares broke out in late January on better-than-expected earnings, then ran to all-time highs ahead of earnings in April. We’ve seen a post-earnings dip in the stock since and selling pressure in high-growth tech stocks hasn’t helped sentiment.
Shares of Microsoft, Alphabet (GOOGL) – Get Report, and Facebook (FB) – Get Report all gained more than 2% Tuesday.
In his “No-Huddle Offense” segment, TheStreet’s Jim Cramer urged viewers to never take a great company for granted. When it comes to the FAANG stocks and Microsoft, many investors regard them as tired, exhausted companies with little innovation left. Yet all of these stocks are slowly taking over the world.
As an example, Amazon has signed an agreement to acquire MGM Studios. On Wednesday, the company made the announcement of the purchase of Hollywood’s historic movie studio for a whopping $8.45 billion.
MGM, which is known for its roaring lion as a logo, has produced numerous hits including James Bond, Pink Panther, and the Rocky franchise.
This deal is the second-biggest acquisition for Amazon after Whole Foods. The retail giant acquired Whole Foods for $13.7 billion in 2017. Amazon said the MGM deal is subject to regulatory approval.
Jeff Bezos and Amazon already own media such as Twitch, The Washington Post, Audible, Amazon Prime Video, Alexa.com, and IMDb.
Jim Cramer said that entertainment has been a “weak spot” for Amazon and that this deal was a “brilliant move” for the online retail giant. “Now, watch what they do in sports,” he told CNBC’s Squawk Box program.
For more in-depth coverage of the technology and FAANG sectors including trading recommendations and investment strategies, follow the experts on Real Money.
Here is a list of the technology and FAANG stocks to watch right now based on their performance over the past week:
Salesforce
Customer-relations-management-software superstar Salesforce (CRM) – Get Report received plaudits from Wedbush analyst Daniel Ives ahead of its earnings report.
Ives has an outperform rating and a $300 price target for Salesforce. The shares recently traded at $224.50, up 0.9%. The target indicates 33% potential upside. The stock has slipped 14% over the past six months amid questions about its growth potential. But, he said Salesforce has plenty of room to grow, both organically and through acquisition.
Jim Cramer likes Salesforce. “It’s the cheapest stock in the group, and I’d buy it,” he said last Tuesday. “I gave it a soft recommendation last night.”
Last Wednesday, Morgan Stanley analyst Keith Weiss upgraded the company to overweight from equal weight, affirming his price target at $270.
The Street Quant Ratings rates Salesforce as a Buy with a rating score of B-.
Workday
In his first “Executive Decision” segment, Cramer spoke with Aneel Bhusri, co-founder and co-CEO of Workday (WDAY) – Get Report, the HR software provider that just posted accelerating revenue growth up 17% to $1.03 billion.
Bhusri explained that during the pandemic, companies were focused on their workforce and making sure they were OK and had all of the tools they needed to be successful. But now, the CFO office is back in full force and companies are again focused on their financials, reporting, and acquisitions. As a result, that side of Workday’s business has been remarkably strong.
TheStreet Quant Ratings rates Workday as a Hold with a rating score of C.
Square
Square (SQ) – Get Report traded higher on Tuesday on talks that the technology and credit card payments provider was wading into commercial and retail banking with plans to offer checking and savings accounts.
Square shares were up 2.5% following a Bloomberg report that hidden code referencing the accounts had been discovered in a recent update to Square’s app for Apple’s iPhone and iPad.
The company calls the new products “Square Checking” and “Square Savings,” according to the code. The code references both types of accounts and indicates that the checking version will integrate with Square’s existing debit card for businesses.
TheStreet Quant Ratings rates Square as a Hold with a rating score of C.
PayPal
PayPal (PYPL) – Get Report, along with BlackRock (BLK) – Get Report, PayPal, NBCUniversal, and Comcast Ventures (CMCSA) – Get Report, is backing Acorns Grow, the saving and investing app, which said Thursday it would go public by merging with the Pioneer Merger PACK special-purpose-acquisition company.
The combined entity is valued at $2.2 billion, the companies said. Acorns Grow, Irvine, Calif., says it’s the largest subscription service in U.S. consumer finance, with 4 million subscribers.
Paypal is among a few other tech companies like Apple and Uber (UBER) – Get Report that have made commitments in the fight for racial equality.
TheStreet Quant Ratings rates PayPal as a Buy with a rating score of B+.
Microsoft
In early April, Microsoft (MSFT) – Get Report announced a blockbuster $19.7-billion acquisition of Burlington, Massachusetts-based healthcare-focused cloud and AI provider Nuance Communications (NUAN) – Get Report.
“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” Microsoft CEO Satya Nadella said of the acquisition. “AI is technology’s most important priority, and healthcare is its most urgent application.”
The Street Quant Ratings rates Microsoft as a Buy with a rating score of A.
Facebook (FB) – Get Report shares fell this past week after Citigroup analyst Jason Bazinet downgraded the tech titans to neutral from buy. The company depends on advertising for almost all of its revenue, and Bazinet sees ad-spending growth decelerating.
Facebook reported strong first-quarter earnings, with net income of $9.5 billion, or $3.30 a share, compared with $4.9 billion, or $1.71, a year earlier.
TheStreet Quant Ratings rates Facebook as a Buy with a rating score of A-.
Apple
Apple (AAPL) – Get Report is seeking a business development manager with experience in alternative payments, including cryptocurrencies. An ad on the tech giant’s website said the Apple Wallets, Payments, and Commerce team was looking for a biz dev manager to find and negotiate partnerships in alternative payments.
The three-week antitrust trial between Epic Games and Apple is expected to wrap up Monday. A ruling is expected in the coming months. Epic Games, the maker of the popular “Fortnite” game, has alleged that Apple’s App Store has turned into an illegal monopoly, arguing that Apple collects commissions as high as 30% for in-app transactions because it forbids third-party app stores on its mobile devices.
Apple CEO Tim Cook took the stand for the first time Friday and said it “would be a huge convenience issue, but also the fraud issues would go up” if the company allowed third-party app marketplaces, in addition to its own App Store.
Jim Cramer said that if someone is trying to run a website or start a business independently, it’s almost impossible to run it without being in the App Store.
TheStreet Quant Ratings rates Apple as a Buy with a rating score of A.
Amazon
Amazon (AMZN) – Get Report is considering moving further into the pharmacy space by opening brick-and-mortar storefronts, according to a new report. The e-commerce giant has discussed using its Whole Foods stores to house the pharmacies, as well as launching standalone sites, Business Insider reported Wednesday, citing sources familiar with the matter.
The company’s plan to take a bigger slice of the roughly $370-billion prescription drug market has not been finalized despite ongoing discussions around the idea, according to the story. It could take at least a year before any meaningful rollout of physical stores occurred, BI reported, but Amazon has considered opening standalone stores in several areas including Boston and Phoenix.
Late last year, Amazon announced the launch of its online drugstore, Amazon Pharmacy, about two years after the Seattle-based company acquired PillPack for $753 million. PillPack was an online pharmacy known for organizing pills into packets and delivering drugs directly to consumer homes.
TheStreet Quant Ratings rates Amazon as a Buy with a rating score of B.
Netflix
Netflix (NFLX) – Get Report said last month that it expects to add around 1 million new subscribers to its streaming service — the largest in the world — this quarter, a figure came in well shy of Street forecasts of around 4.8 million.
The estimate followed a weaker-than-expected March quarter tally of 3.98 million, which also missed analysts’ estimates of a 6.25 million total.
Today, streaming is king, and Netflix is a key player. However, Netflix shares were marked 0.6% lower in early trading this past week to change hands at $490.90 each, a move that would extend the stock’s year-to-date decline to around 9%.
TheStreet Quant Ratings rates Netflix as a Buy with a rating score of B.
Alphabet
Alphabet’s (GOOGL) – Get Report Google is partnering with HCA Healthcare (HCA) – Get Report to help with digital medical records. Unlike IBM’s (IBM) – Get Report attempt to “revolutionize” healthcare with Watson years ago, Cramer said Google is taking a slow, measured approach, with no Earth-shattering announcements.
Google also plans to double the number of its staffers working on artificial-intelligence ethics in coming years, the company said.
Alphabet recently traded at $2,275.05, down 0.73%. But last month, multiple analysts raised their price targets for Alphabet after the Mountain View, Calif., advertising and tech giant posted a blowout earnings report for the first quarter.
TheStreet Quant Ratings rates Alphabet as a Buy with a rating score of A.
Zoom Video Communications
Shares of Zoom Video (ZM) – Get Report got a boost from a mostly bullish note from analysts at Mizuho who maintained their buy rating, but also lowered the company’s price target.
Zoom shares fell as much as 8% in the last two trading sessions, but the stock rebounded nicely this past week, climbing 5.6% to $306.46 Friday afternoon.
TheStreet Quant Ratings rates Zoom Video Communications as a Sell with a rating score of D+.
Salesforce, Microsoft, Facebook, Apple, Amazon, and Alphabet are holdings in Jim Cramer’s Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells these stocks? Learn more now.
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