To Citigroup and RBC Capital, NVIDIA Corporation (NASDAQ:NVDA) and Amazon.com, Inc. (NASDAQ:AMZN) are the hot tech stocks to buy. With respect to NVDA, to those on edge regarding a rumored downturn in gaming coupled with the added risk of fierce rivalry, one analyst dismisses these nervous rumbles. Meanwhile, one of the top 10 best analysts on the Street roots for Amazon’s Alexa to carry the e-commerce leader to a multi-billion dollar voice-activated internet platform in the next four years. Let’s dive in:
Apprehensive on NVIDIA? Street Underestimating Data Center
One investor’s fears mark another’s shrewd advantage, which Citigroup analyst Atif Malik believes is exactly the case for NVIDIA. In fact, the analyst remains unconcerned overall regarding the chip giant’s prospects, believing strength in data center will carry NVDA to a better margin.
As such, the analyst reiterates a Buy on NVDA with a price target of $145, which represents a just under 47% increase from where the shares last closed.
“We remain buyers of NVDA and view recent pull-back in the stock on sell side gaming and competitive concerns as an enhanced buying opportunity. Top gaming computer makers’ Feb sales data plus our proprietary gaming survey which shows strong brand loyalty and purchase intentions, keep our C17 +14% Y/Y gaming sales intact. Survey indicates strong or 75% purchase intentions for NVDA GPUs over next 12 months with majority or 63% responses indicating better price to performance vs. AMD. Top add-in-card/OEM Taiwan customers ASUS (12% of sales) and MSI reported down 2% M/M Feb sales or in-line with 3-yr seasonality. Mar-Q OEM PC sales expectations of down 15- 20% are in-line with our/Street down 17% Q/Q Apr-Q gaming. We expect data center to be the fastest growth segment in C17 on AI related workloads. We believe Street is under estimating the ASP/margin lift on higher GPU attach rates in data centers,” Malik surmises.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, three-star analyst Atif Malik is ranked #1,500 out of 4,515 analysts. Malik has a 58% success rate and realizes 4.4% in his yearly returns. When recommending NVDA, Malik yields 8.8% in average profits on the stock.
TipRanks analytics indicate NVDA as a Buy. Based on 28 analysts polled by TipRanks in the last 3 months, 15 rate a Buy on NVIDIA stock, 9 maintain a Hold, while 4 issue a Sell. The 12-month average price target stands at $110.19, marking an 11% upside from where the stock is currently trading.
Amazon to Soar Long-Term on Back of Voice-Activated Internet Growth
Top analyst Mark Mahaney at RBC Capital spotlights Amazon’s Alexa technology as one of the crucial keys to profitability and longevity. Particularly following survey results that have revealed “dramatic” boosts in not just awareness of the device, but also surges in levels of ownership satisfaction, Mahaney projects a future 100 million and beyond installed base within the next three to five years.
In reaction, the analyst reiterates an Outperform rating on shares of AMZN with a $900 price target, which represents a 5% increase from where the stock is currently trading.
First, Mahaney highlights, “Our second survey on Amazon Alexa devices found a material increase in brand awareness and in adoption/ownership of these devices. In a relatively short 6 months, we have seen awareness rise from 33% to 77%. Over the same period, we have tracked an almost 3X increase in ownership […]”
Alexa could be a real gamechanger for AMZN, as Mahaney asserts, “Amazon has a potential mega-hit on its hands with Alexa – a product/ service that has the potential to materially increase the frequency and intensity of its relationship with customers.”
Though the analyst notes he once assessed Amazon’s Alexa to outsell Google Home at 10 to one odds, he has since observed “surprisingly strong initial traction” for Alphabet. “That said, Google still has a lot of catching up to do,” adds the analyst, who seems largely undeterred in his full steam ahead bullish perspective on the online auction and e-commerce leader’s success.
Alexa’s technology is clearly the big-league trend of the future. “Voice-Activated Internet (or VAI) burst on to the scene in 2016, led by Amazon’s Alexa devices and later by Google Home. The value prop is becoming increasingly powerful and awareness and ownership are ramping. We expect VAI growth will be a major L-T trend and represents a material opportunity for AMZN & GOOGL, with AMZN potentially seeing $10B in Rev by 2020,” Mahaney contends.
Mark Mahaney has a very good TipRanks score with a 72% success rate and a high ranking of #8 out of 4,515 analysts. Mahaney garners 21.8% in his annual returns. When recommending AMZN, Mahaney gains 33.7% in average profits on the stock.
TipRanks analytics demonstrate AMZN as a Strong Buy. Out of 28 analysts polled by TipRanks in the last 3 months, 27 are bullish on Amazon stock and 1 remains sidelined. With a return potential of 10%, the stock’s consensus target price stands at $941.68.
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