Large-caps – companies with large market capitalizations – are any publicly traded company with a valuation over $10 billion. These captains of industry tend to be long-established giants with dominant footholds in their sectors. And though you might not have heard of some of them, chances are, your life depends on many of them to run smoothly in the modern age.
Unlike small- and mid-cap companies, large-caps usually aren’t fast-growing “get rich” opportunities. Instead, they offer a bulwark of stability, reliability, and the odd lucrative dividend to a volatile portfolio. With entrenched histories and well-established profit streams, they’re the stocks that “always perform” on the other side of a recession… at least, eventually.
And today, these are the stocks we’re going to focus on, courtesy of Forbes AI Investor: large-cap giants that, for one reason or another, have caught the attention of our AI.
Q.ai runs daily factor models to get the most up-to-date reading on stocks and ETFs. Our deep-learning algorithms use Artificial Intelligence (AI) technology to provide an in-depth, intelligence-based look at a company – so you don’t have to do the digging yourself.
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NVIDIA Corporation (NVDA)
Nvidia Corporation nudged up 1.4% Friday t0 $819.48 per share, closing out the day with 8.6 million trades on the books. The stock is up 57% for the year and trading at 50.8x forward earnings.
The semiconductor manufacturer has made rounds in the news recently thanks to its proposed acquisition of chip designer Arms Holdings. If it holds up to antitrust scrutiny, it will enhance Nvidia’s computing abilities and help the chipmaker expand into new markets, including the realm of fast-growing 5G networks.
Currently, the deal is worming through a rigorous regulatory review process. But in the last month, companies like Broadcom, Marvell Technology, and MediaTek have all voiced their support for the $40 billion acquisition. Assuming all goes to plan, the deal is expected to close by early 2022.
In the last three fiscal years, Nvidia’s revenue has grown 64.4% to $16.7 billion from $11.7 billion. In the same period, operating income grew almost 50% from $3.8 billion to $4.7 billion, while per-share earnings jumped 27.6% to $6.90 compared to $6.63 three years ago. That said, return on equity fell from 49.3% to 29.8% in the last year.
Currently, Nvidia is expected to see forward 12-month revenue growth around 2.4%. Our AI rates Nvidia highly overall, with As in Technicals, Low Volatility Momentum, and Quality Value, and an F in Growth.
QUALCOMM, Inc (QCOM)
Qualcomm, Inc jumped up 1.3% to $142.58 per share on Friday, ending the day with 5.4 million trades on the books. The stock is down 6.4% YTD, though up against the 22-day price average of $136.38. Currently, Qualcomm is trading at 17.6x forward earnings.
Qualcomm is another large-cap semiconductor company – but unlike Broadcom and MediaTek, this giant stringently opposes the Nvidia-Arms acquisition. Qualcomm, along with other critics in the space, argue that greenlighting the deal will allow one chip company to control the design process for dozens of competitors and may strangle industry-wide innovation in favor of prioritizing its own lucrative technologies.
Competitor mergers aside, Qualcomm is expanding operations in its own rights. The company revealed an upgrade to its most powerful mobile chipset, the Snapdragon 888, and announced that it will power higher-end phones from Motorola, Vivo, and ASUS, among others. Qualcomm’s new president, Cristiano Amon, also recently reported that he thinks the company can best its competitors with the help of architects from Apple’s new M1 project – supposedly, as long as Nvidia doesn’t get in the way.
In the last three fiscal years, Qualcomm’s revenue has grown 30% to $23.5 billion compared to $22.6 billion in the 36-month-ago time. Operating income has skyrocketed 136.4% in the same period, rising from $3.77 billion to $6.2 billion in the last fiscal year. Moreover, per-share earnings leapt 54.5% from $3.39 to $4.52 over the past three fiscal years, while ROE has tripled from 31.5% to 94.6%.
Currently, Qualcomm is expected to see around 5% revenue growth in the next 12 months. Our AI rates Qualcomm as a mixed bag of an investment, with As in Technicals and Low Volatility Momentum and Fs in Growth and Quality Value.
Costco Wholesale Corporation (COST)
Costco Wholesale Corporation closed out Friday at $398.94 per share, an increase of 1.1% on the day and up 5.9% for the year. The stock ended the day at 1.7 million trades and over $11 more than the 22-day price average. Currently, Costco is trading at 36x forward earnings.
Costco is a mammoth warehouse company that – to no one’s surprise – fared well during the pandemic. The company made great strides, snapping up subscriptions, supplying households with low-cost essential items (and a few frivolities), and ending quarter after quarter with monster sales. In fact, the most recent quarter saw Costco increase net sales by 21.7%, not to mention the 900,000 new paid subscriptions.
In the last fiscal year, Costco’s revenue grew to $166.8 billion, a 31.8% increase from $141.6 billion three years ago. Moreover, operating income soared 55.1% from $4.5 billion to $6 billion across the same three years, while per-share earnings grew 50% from $7.09 to $9.02. That said, return on equity fell from 26.3% to 23.7%.
Over the next twelve months, Costco’s revenue is expected to grow 4.4%. Our AI rates Costco as a worthwhile investment overall, with As in Technicals, Growth, and Quality Value – and despite a big, fat F in Low Volatility Momentum.
Johnson & Johnson (JNJ)
Johnson & Johnson nudged up 1.8% Friday to $168.98 per share, closing out the day at 9 million trades. The stock is up 7.4% for the year and is trading around 17.8x earnings.
Johnson & Johnson made history as one of three pharmaceutical companies to produce a viable Covid-19 vaccine in the United States last year. Despite a few hiccups, the company single-shot alternative to the popular – and novel – mRNA vaccines proved to be easier to store. (Though the company did briefly pull the vaccine on concerns that it could cause blood clots in a handful of recipients.)
Since then, Johnson & Johnson has bounced back thanks to a report that the company’s shot does, in fact, provide up to 18 months of protection against the coronavirus, including the highly contagious delta variant sweeping the globe.
In the last three fiscal years, Johnson & Johnson’s revenue grew around 3.2% to $82.58 billion compared to $81.58 billion, while operating income slid slightly from $21.2 billion to $20 billion. Meanwhile, per-share earnings ticked down from $5.61 to $5.51 in the period, while ROE slid from 25.5% to 24%.
All told, Johnson & Johnson is expected to see revenue growth around 1.5% in the next twelve months. Our AI rates this large-cap pharmaceutical stock as a mixed bag: As in Technicals and Growth and Fs in Low Volatility Momentum and Quality Value.
Texas Instruments, Inc (TXN)
Texas Instruments, Inc closed up 0.7% to $192.21 per share on Friday, ending the day with 2.4 million trades on the books and a price above the 22-day, $188.54 average. The stock is trending up 17.1% YTD and trading at 25.6x forward earnings.
You may remember Texas Instruments from the company logo on your high school upper-level math class calculator. But as it turns out, Texas Instruments is mostly involved in the tech industry as a large-cap chipmaker – and the company is making the rounds in the news thanks to its announcement that it plans to buy out Micron Technology, Inc.’s factory in Lehi, Utah to boost production capacity.
The deal is expected to go through for $900 million all told. Texas Instruments has noted that it will outfit the factory with its own technologies and allow workers to remain as its employees.
In the last three fiscal years, Texas Instruments saw its revenue decline from $15.8 billion to $14.5 billion. At the same time, operating income slid from $6.7 billion to $5.9 billion – though per-share earnings actually grew 18% in the period from $5.59 to $5.97. Moreover, return on equity climbed from 57.7% to 61.8%.
Currently, this large-cap chipmaker is expected to grow around 0.4% in the next twelve months. Our AI rates Texas Instruments A in Technicals, Growth, and Quality Value – though it’s earned an F in Low Volatility Momentum.
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