Apple (AAPL) – Get Report, Microsoft (MSFT) – Get Report and Nuance Communications (NUAN) – Get Report are the top three tech companies to watch as first-quarter earnings begin rolling out, with the trio poised to show better-than-expected earnings, sales and fundamentals thanks to their rising the fourth industrial revolution.
In a research note to clients on Wednesday, Wedbush Securities analysts Dan Ives and Strecker Backe said that while valuations will continue to be an emotional bull/bear debate, “… the fundamental growth on the horizon for these next-generation technologies is unprecedented as this fourth Industrial Revolution begins to take hold across the tech landscape.
“We believe first-quarter earnings over the next month will be a major positive catalyst for tech names as our checks continue to show robust fundamentals/deal activity across the board,” the analysts wrote, adding that a 25% to 30% upward move for tech stocks is potentially in the cards through the remainder of the year, despite lingering rotation fears.
For Apple, Ives sees the “Supercycle” thesis playing out in both the March and June quarters, with the Cupertino, Calif. giant selling north of 240 million iPhones – well above current forecasts of 220 million for full-year 2021 and besting its previous record of 231 million units sold in 2015.
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Microsoft also is poised to be a long-term winner, based on Ives’ team’s field checks, with the Redmond, Wash.-based software giant making progress in the cloud arms race with growth of Azure, a move that they say will continue to narrow the gap between Microsoft and Amazon (AMZN) – Get Report in the web-services world.
Healthcare cloud giant Nuance, meantime, is another Wedbush favorite as the company continues to be laser-focused on building a global cloud healthcare and AI-driven business as more hospital-wide deployments shift to the cloud, especially as the focus on cloud, security, and sharing healthcare data becomes front and center.
Ives and his team have outperform ratings on all three companies.
Shares of Apple were up 0.10% at $126.34 in premarket trading, while shares of Microsoft were up 0.14% at $248.20. Shares of Nuance were unchanged after ending the trading day Tuesday down 0.04% at $44.23.
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