The nearly two-year long trade conflict between the United States and China is showing no signs of abatement any time soon. The technology sector has become highly trade sensitive, with China being the low-cost supplier of intermediary products and other inputs to the high-tech U.S. industries. Moreover, the Asian giant is the largest market for U.S. high-tech products. Therefore, it was being anticipated that the technology sector will suffer the most due to the trade war.
However, surprising many industry experts, the technology sector has performed exceptionally well in 2019 so far, surpassing the broader market return. Year to date, the Technology Select Sector SPDR (XLK), one of the 11 broad sectors of the S&P 500 Index, has rallied 39.6% outpacing the benchmark index’s gain of 23.5%. Notably, the XLK had ended 2018 with a loss of 2.9%. This clearly indicates this sector’s remarkable turnaround in the current year.
Trade Impasse Continues
On Nov 13, The Wall Street Journal reported that the deadlock in the trade-related negotiation persists, regarding the withdrawal of U.S. tariffs on Chinese goods and China’s earlier commitment about purchasing $50-billion agricultural products from the United States. The Chinese administration has also been resisting requests from the White House to curb the forceful transfer of intellectual properties as well as enforcement mechanisms.
On Nov 12, President Donald Trump delivered a speech at the Economic Club of New York, where he said a U.S.-China trade deal “could happen soon,” and added that a phase one agreement is “close.” At the same time, he threatened more tariff hikes on Chinese imports if the trade negotiation fails to produce an interim agreement. Trump categorically mentioned that he would only accept the interim trade deal, if the agreement worked to the advantage of U.S. workers and businesses.
In a strong statement, he noted “since China’s entrance into the World Trade Organization in 2001, no one has manipulated better or taken advantage of the United States more.” “I will not say the word ‘cheated,’ but nobody’s cheated better than China, I will say that,” the President further added.
5 Tech Giants Skyrocketing in 2019
In line with the impressive Wall Street rally in 2019 so far, especially in the technology sector, we have narrowed down our search to five tech behemoths. All these stocks have market capital of more than $100 billion and rallied 45% or higher year to date.
The chart below shows price performance of five stocks year to date.
Apple Inc. AAPL designs, manufactures and sells iPhone, iPad, iPod, Apple TV, Mac personal computers, Apple Watch, HomePod and AirPods. These devices are powered by software applications including iOS, macOS, watchOS and tvOS operating systems.
The Zacks Rank #3 (Hold) company has an expected earnings growth rate of 8.4% for the current quarter. The Zacks Consensus Estimate for the current quarter has moved 15.7% north over the last 30 days. Year to date, the stock has surged 66.5%.
QUALCOMM Inc. QCOM designs, develops, manufactures, and markets digital communication products worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI).
Although the company has a negative expected earnings growth rate for the current quarter, the Zacks Consensus Estimate for the quarter climbed 13.3% over the last 30 days. Moreover, QUALCOMM has a projected earnings growth rate of 13% for the next quarter. Year to date, this Zacks #1 (Strong Buy) Ranked stock has soared 59%. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA Corp. NVDA is a worldwide leader in visual computing technologies and the inventor of the graphic processing unit (GPU), which is a high-performance processor. It operates in two segments, GPU and Tegra Processor.
The Zacks Rank #3 company has an estimated earnings growth rate of 108.8% for the ongoing quarter. The Zacks Consensus Estimate for the quarter has moved up 0.6% in last 30 days’ time. Year to date, the stock has appreciated 57.1%.
Facebook Inc. FB enables people to connect, share, discover and communicate with one other on mobile devices and personal computers. Its products include Facebook platform, Instagram photo upload platform, Messenger and WhatsApp messaging application platforms.
The Zacks Rank #3 company has an expected earnings growth rate of 5.5% for the current quarter. The Zacks Consensus Estimate for the quarter has moved 0.8% upward over the last 30 days. Year to date, the stock has climbed 47.3%.
Microsoft Corp. MSFT is one of the largest broad-based technology providers in the world. Although software is the most-important revenue source, its offerings also include hardware and online services. Microsoft has a dominant position in the desktop PC market, with its operating systems being used in the majority of PCs worldwide.
This Zacks Rank #2 (Buy) company has a projected earnings growth rate of 19.1% for the fourth quarter. The Zacks Consensus Estimate for the quarter has improved 3.1% over the last 30 days. Year to date, the stock has rallied 45.8%.
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Facebook, Inc. (FB): Free Stock Analysis Report
QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
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NVIDIA Corporation (NVDA): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.