5 Tech Stocks That Braved Nasdaq's Loss Of 2018 Gains

This year has been quite volatile for the tech-heavy Nasdaq composite. While the index scaled new highs in June, it lost most of that gain by early December.

The index was majorly impacted by the data privacy issues faced by behemoths like Facebook FB, Alphabet’s GOOGL Google, creating an environment of institutional sell-offs. The concern over data privacy called for increased regulation and strict monitoring of social media companies globally. Moreover, implementation of GDPR hurt growth in Europe.

Further, growing U.S. protectionism, tariff imposition on Chinese imports and the U.S. Federal Reserve’s hawkish stance related to interest rate hikes hurt the index.  

Tariffs & Other Blows Disrupt Stock Market

On Aug 31, the United States and Canada delayed their negotiations on trade issues, leading to a drop in the stock market as a whole. Despite this, tech stocks like Apple and Amazon helped the Nasdaq composite gain 0.26%.

However, the technology sector was jolted by the United State’s imposition over imports from China worth $250 billion ($50 billion in August & $200 billion in September) prompting a retaliatory tariff by China. The technology sector was hit the hardest, especially the chip stocks, as most of the demand came from China.

Moreover, rising interest rates led to losses for major technology companies, pulling the Nasdaq composite to correction levels. The persistent decline in DRAM and NAND pricing due to oversupply and weaker-than-expected growth in end-market demand, is creating a havoc in the semiconductor market.Lack of demand from cryptocurrency miners further hurt chip stocks like NVIDIA.

After going through a number of crests and troughs, by early December, the index lost what it gained through the year. Nonetheless, the composite has gained 2.8% year to date.

This gain can be partly attributed to a few tech stocks that have withstood the volatility witnessed by the Nasdaq in 2018.

Notably, rapid adoption of cloud computing, Internet of Things, wearables and Artificial Intelligence (AI) and its tools have been fueling growth in the sector. The Technology Select Sector SPDR ETF XLK, which has returned 2.6% so far this year against the S&P 500 Composite’s decline of 0.9%, bears testimony to the fact.

Our Picks

Here we pick five stocks from the technology sector, which ended up outperforming the Nasdaq year to date. All these stocks sport a Zacks Rank #1 (Strong Buy) and promising prospects. You can see the complete list of today’s Zacks #1 Rank stocks here.

Synopsys, Inc. SNPS shares have gained 5.3% year to date.

Synopsys benefited from solid growth in its EDA and IP businesses in 2018. Additionally, the acquisition of Cigital and Black Duck are establishing tactical quality relations with clients, leading to higher demand creation, cross-selling and a substantial rise in brand recognition.

In the past 60 days, the Zacks Consensus Estimate for its 2019 earnings has increased from $4.68 to $4.73, reflecting year-over-year growth of 11.47%.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this ...

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