For immediate release
Chicago, IL – December 17, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day Zacks Equity Research analysts discuss the latest news and events affecting stocks and the financial markets. Stocks recently featured in the blog include: NVIDIA Corporation NVDA, Advanced Micro Devices Inc. AMD, QUALCOMM Inc. QCOM, Analog Devices Inc. ADI and Broadcom Inc. AVGO.
Here are the highlights from Thursday’s analyst blog:
Fed sets stage for year-end rally: 5 top choices
On December 15, Wall Street witnessed a relief after the Fed released its latest statement from the 2021 FOMC meeting. The outcome of the FOMC meeting was in line with market expectations. In fact, the adjustment related to a more aggressive Fed was already factored into equity market valuation. As a result, Wall Street witnessed a strong move north as much of the investor community was unsure about a more aggressive Fed.
The stage is set for a Wall Street rally at the end of the year, as the Fed has cleared uncertainties surrounding near-term interest rate movements and the resurgence of the Omicron variant of the coronavirus has so far had little impact on the economy. the world economy. That’s why it makes sense to invest in momentum/growth stocks with favorable Zacks rankings. We will discuss five of those stocks, namely: NVIDIA, Advanced micro-devices, QUALCOMM, Analog Devices and broadcom.
Fed allays investor concerns
Fed Chair Jerome Powell said in his post-FOMC statement that the central bank will ramp down its monthly bond-buying program from $15 billion a month to $30 billion a month effective January 2022. At this rate, it will quantitative easing program end in March 2022.
Regarding an interest rate hike, Powell said, “We are in a position to end our winding down by March, in two sittings, and we will be able to raise interest rates as and when we think it’s appropriate.”
However, the Fed’s dot plot showed that all 18 members expect at least one rate hike in 2022. Of the 18 Fed members, 12 expect three rate hikes in 2022, followed by two more rate hikes in 2023 and 2024.
Importantly, the FOMC statement reiterated that the Fed will continue its existing benchmark rate of 0-0.25%, which it sets in March 2020, “until labor market conditions reach levels consistent with the Committee’s assessments of maximum employment opportunities.”
According to the Fed, aggregate PCE inflation will remain at 5.3% in 2021, but decline to 2.6% in 2022. The PCE’s core inflation rate – the Fed’s preferred inflation gauge – is estimated to remain at 2.7% in 2022. decrease from an estimated 4.3% in 2021 to 3.5% in 2022.
Markets are sighing with relief
Wall Street’s impressive bull run so far has suffered setbacks since Black Friday due to the coronavirus resurgence and the Fed chairman’s indication to shift to a more aggressive and aggressive policy during the December FOMC meeting.
Concerns about Omicron have already faded as the available evidence shows it to be less serious. On December 15, the Fed allayed market participants’ concerns about short-term interest rate movements, paving the way for a year-end rally.
As a result, the three major stock indices – the Dow, the S&P 500 and the Nasdaq Composite – rose 1.1%, 1.6% and 2.2%, respectively. These indices posted the best daily gains in a week and the best performance on a Fed meeting day since November 5, 2020.
Surprisingly, the technology sector, which is expected to suffer the most from a rise in market interest rates, gained the most on December 15. Sectors of the market’s benchmark, the S&P 500 Index, rose 2.7%. The Philadelphia Semiconductor Index climbed 3.7%.
Our top picks
We narrowed our search to five semiconductor giants (market capital > $50 billion) with strong growth potential for the remainder of 2021. These stocks have seen positive earnings revisions over the past 30 days. Each of our picks has a Zacks Rank #2 (Buy). You can see the full list of current Zacks #1 Rank (Strong Buy) stocks here.
NVIDIA benefits from the wave of work and home learning caused by the coronavirus. NVIDIA is also benefiting from strong growth in GeForce desktop and notebook GPUs, driving revenue from gaming. In addition, a surge in demand for Hyperscale continues to be a tailwind for NVIDIA’s data center business.
The expansion of NVIDIA GeForce NOW is expected to boost the user base. Furthermore, the solid adoption of AI-based smart cockpit infotainment solutions is a boon. The partnership with Daimler-owned Mercedes-Benz is expected to strengthen NVIDIA’s presence in the field of autonomous vehicles and other automotive electronics.
NVDA has forecast earnings growth of 73.2% for the current year (ending January 2022). The Zacks Consensus Estimate for current year earnings has improved 4.6% over the past 30 days.
Qualcomm is well positioned to take advantage of solid 5G traction with increased visibility to meet its long-term revenue targets. For the calendar year 2021, 5G handsets with Qualcomm chips are expected to grow 150% year-over-year in the mid-range to about 450-550 units.
Qualcomm has raised the bar for self-driving cars with the launch of the first automotive platform of its kind — Snapdragon Ride — that allows automakers to transform their vehicles into self-driving cars using AI.
QCOM has forecast earnings growth of 22.8% for the current year (ending September 2022). The Zacks Consensus Estimate for current year earnings has improved 1.5% over the past 30 days.
Advanced micro-devices runs on robust performance from the Computing and Graphics, Enterprise Embedded and Semi-Custom segments. AMD is benefiting from strong sales of its Ryzen and EPYC server processors, thanks to the increasing diffusion of AI and Machine Learning in sectors such as cloud, gaming and supercomputing.
The growing influence of 7 nanometer products in the data center vertical, driven by home working and online learning trends, is a major catalyst. Advanced Micro Devices has raised its revenue forecast for 2021 due to strong growth across all businesses.
AMD has forecast earnings growth of over 100% for the current year. The Zacks Consensus Estimate for current year earnings has improved 0.4% in the past 7 days.
broadcom rides on continued strength in both Semiconductor solutions and Infrastructure software verticals. In the fourth quarter of fiscal 2021, Semiconductor’s revenues benefited from increased demand for wireless solutions and continued momentum in network and broadband solutions.
AVGO’s network revenue was driven by service provider routing as it expands 5G networks for backhaul, metro and calling, as well as a large gain in Ethernet network interface controllers in data centers. Synergies from acquisitions of CA and Symantec’s enterprise security business contributed to Broadcom’s results. Furthermore, an optimistic outlook for the first quarter of a strong increase in revenues from broadband, networks and wireless networks is encouraging for AVGO.
Broadcom has forecast earnings growth of 17.9% for the current year (ending October 2022). The Zacks Consensus Estimate for current year earnings has improved 6.2% over the past 7 days.
Analog Devices has strength in communications, consumer, industrial and automotive end markets. Furthermore, solid demand for high-performance analog and mixed-signal solutions has been a windfall. Growing momentum in the electric vehicle space driven by robust Battery Management System solutions continues to be a positive for ADI.
Furthermore, the growing victories in power design are the other positives for Analog Devices. The HEV platform’s solid momentum in the cabin electronics ecosystem continues to be a tailwind for ADI. In addition, Analog Devices remains optimistic about the growth prospects associated with the acquisition of Maxim and 5G.
ADI has forecast earnings growth of 16.7% for the current year (ending October 2022). The Zacks Consensus Estimate for current year earnings has improved 4.4% over the past 30 days.
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