Every week, Q.ai compiles a list of stocks that fit into a particular basket, or investment theme, courtesy of the Forbes AI Investor platform. These stocks may have nothing in common with each other than the overarching bucket into which we put them – or as is the case this week, they may be fairly similar in terms of sector, makeup, and their eventual desire for market domination.
That’s right: this week, we’re talking U.S. Tech Stocks – with a heavy emphasis on 5G innovation and chip production.
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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Verizon Communications, Inc (VZ)
Verizon Communications, Inc nudged up 0.7% on Friday, closing out the day at $56.07 per share on the back of 13.75 million trades. The stock is trading just pennies below its 10- and 22-day price averages at a forward 12-month P/E of almost 11x.
Verizon is a giant among tech stocks – not to mention a household name – thanks to its wide-reaching wireless services. The company has spent much of the last year developing and rolling out its 5G wireless capacity as it innovates for the future, rather than stick to what currently works in the industry.
From partnering with Amazon and Microsoft to bolster its 5G computing platforms to spearheading the all-new THOR disaster communications vehicle, Verizon has focused on 5G wireless rather than fiber optic or broadband connections as the future of its growth. And with the pandemic year providing the perfect opportunity for the tech and communications giant to expand, Verizon is looking to fully integrate its new 5G C-band spectrum in time for Q1 2022.
Verizon leading the charge on the 5G wireless revolution will likely prove fruitful for the company’s bottom line. In the last three fiscal years, the company’s revenues and operating income have both stumbled slightly. Revenue fell from $130.8 billion to $128 billion in the period, while operating income slipped from $31.7 billion to $31.4 billion.
At the same time, per-share earnings rose from $3.76 to $4.30, although return on equity did drop from 32% to just under 28%. All told, Verizon is expected to experience revenue growth around 0.9% in the next twelve months.
Currently, our AI rates Verizon as a mixed bag of an investment. The company earned As in Technicals and Growth – and Fs in Low Volatility Momentum and Quality Value.
TTM Technologies, Inc (TTMI)
TTM Technologies, Inc. nicked up 0.2% to $14.09 on Friday, closing out the day with 858.8k trades on the books. The stock is up 2.1% for the year and is currently trading around 10.4x forward earnings.
TTM Technologies is a little-known 5G stock that boasts a small – but growing – market cap around $1.5 billion. The company, which is headquartered in Costa Mesa, CA, focuses on the quickturn and volume production of global printed circuit boards (PCBs). In short, these circuit boards support and connect electronic components to allow electrical activity to pass throughout machines – and they’re becoming increasingly important in a 5G-driven world.
Currently, TTM primarily services the aerospace, automotive, and data center computing markets at this time, though it also dabbles in medical and networking/communications. It’s this last segment that presents the most potential growth capacity for TTM, however, as increasing 5G rollout and demand means that more – and more specialized – PCBs are needed to support the higher data rates, frequencies, and other challenges that mixed signal designs present.
However, it will be a while before TTM Technologies can capitalize on the growing 5G movement. And as a small company, TTM is prone to increased volatility compared to large-cap counterparts. As such, the last three fiscal years have seen the company’s revenue fall from $2.2 billion to just over $2.1 billion and its operating income slip from $123.6 million to $114.3 million.
That said, per-share earnings have risen in the period to $1.67 compared to $1.38. Moreover, the company is expected to see increasing revenue in the coming twelve months to the tune of 1.26% growth. As a result, our AI sees good things ahead for this company, and has rated TTM Technologies A in Technicals, Growth, and Quality Value – though it’s earned a big, fat F in Low Volatility Momentum.
Qualcomm, Inc (QCOM)
Qualcomm, Inc surged to $141.43 Friday, a price jump of 2.3% on the back of 7.36 million trades. The stock is currently down almost 7.2% for the year – though up from the 22-day price average of $137.62 – and trading at 17.45x forward earnings.
Qualcomm is a tech giant most renowned for providing the processors that power a variety of major Android smartphones. The company boasts sizeable revenues and significant growth potential – if it can capitalize on its growing “Snapdragon Insider” fandom. Unfortunately, the chipmaker seems to have stumbled into a quagmire as of late, with its two latest tech offerings falling short of the expected enthusiasm.
To start, Qualcomm’s upgraded mobile chipset made a less-than-splashy debut two weeks ago at the Mobile World Congress in Barcelona, despite noting that its powerful Snapdragon 888 Plus would start powering higher-end devices ASUS, Motorola, and Vivo, among others. And just this week, Qualcomm reported that it’s releasing a $1,500 smartphone made almost entirely of parts recycled or modeled after other phone designs – with the regular, ole Snapdragon 888 chip powering the insides.
Only time will tell if these latest offerings will boost the company’s mammoth bottom line. In the last three fiscal years, Qualcomm’s revenue jumped over 30% to $23.5 billion compared to $22.6 billion, while operating income surged over 136% to $6.23 billion against $3.77 billion in the three-year-ago period. Additionally, EPS leapt from $3.39 to $4.52 as ROE more than tripled to 94.6% in the last fiscal year.
All told, Qualcomm is expected to see around 5% revenue growth in the next 12 months. Our AI rates this U.S. Tech Stock as a mixed bag for investors with As in Technicals and Low Volatility Momentum and Fs in Growth and Quality Value.
Applied Materials, Inc (AMAT)
Applied Materials, Inc closed up 1.8% to $134.90 on Friday, ending the day at 5.76 million trades with prices falling around $3 below the 10-day price average. Currently, Applied Materials is up 56.3% for the year and trading at 18.7x forward earnings.
Applied Materials, Inc. is the U.S. tech stock that makes other tech stocks possible. The company supplies software, services, and equipment to semiconductor manufacturers and flexible electronic coating producers; and also offers installation, maintenance, and warranty support for its products.
Thanks to Applied Materials’ products, its customers can go forth and design better memory chips and processors, higher-resolution displays, and a variety of flexible electronics. And the company is quite profitable for it, as the last three fiscal years have seen revenue grow around 18.7% to $17.2 billion in the last year compared to $16.7 billion three years prior.
Additionally, per-share earnings jumped over 62% in the period from $2.96 to $3.92, while return on equity inched up from 37.5% to 38.5%. That said, operating profit did fall slightly in the same three-year time frame, slipping from $4.496 billion to $4.468 billion.
All told, Applied Materials is expected to see robust revenue growth around 6.8% in the next twelve months. Our AI rates this U.S. Tech Stock as a solid investment overall, with As in Technicals, Low Volatility Momentum, and Quality Value – though it did earn an F in Growth.
AT&T, Inc (T)
AT&T, Inc closed up almost 1% to $28.45 on Friday, ending the day with 34 million trades. The stock is trending just beneath its 10- and 22-day price averages and down 1% for the year. Currently, this U.S. Tech Stock is trading at 9.2x forward earnings.
AT&T is the world’s largest telecommunications company and the second-largest provider of mobile phone services. In other words, it’s the pinnacle of its sector – and it’s still growing.
For instance, the company announced a new partnership with Microsoft to outsource its 5G network to Microsoft’s Azure cloud platform. This deal combines two of the largest cloud computing companies to maximize efficiency – and profits – as 5G innovation continues to evolve.
AT&T also unveiled an extended collaboration with Google Cloud in the form of their end-to-end edge solutions that will service industries such as retail, healthcare, and manufacturing, among others. This partnership leverages both AT&T’s growing 5G capabilities and Google’s computing tech to enhance businesses with on-premise multi-access edge compute (MEC) tech.
Both of these partnerships will hopefully prove fruitful to AT&T’s bottom line – which, admittedly, is about as bloated as a U.S. Tech Stock’s bottom line can be. The company’s revenue expanded 1.3% to $171.76 billion over the last three fiscal years, compared to $170.75 billion – though operating income actually shrank from $31.6 billion to $25.66 billion in the same period. Moreover, per-share earnings dropped from $2.85 to $0.75, and return on equity plunged from 11.9% to 2%.
All told, AT&T is another mixed bag on our list. While the company’s future shows promise – and its bottom line is bursting at the seams – our AI rates this tech stock A in Technicals and Growth and F in Low Volatility Momentum and Quality Value.
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