6 Technology Stocks Set To Beat Estimates This Earnings Season

Technology stocks are anticipated to see a sluggish earnings season, primarily due to continued softness in the semiconductor space.

Semiconductors, which are the building blocks of most emerging technologies like AI and IoT, reported weak sales on a year-over-year basis in October and November. Moreover, while October sales improved on a month-over-month basis, November sales declined.

The sluggishness can largely be associated with higher tariffs on electronics, thanks to the U.S.-China trade tussle. Further, lower memory chip prices are expected to have affected the growth of companies like Samsung.

Notably, the Korean giant provided sluggish guidance for the fourth quarter. Per a CNBC report, the company’s estimated consolidated operating profit of 7.1 trillion Korean won ($6.02 billion) indicates a decline from 10.80 trillion Korean won Samsung posted in the year-ago quarter.

Notably, the World Semiconductor Trade Statistics (WSTS) organization projects annual global semiconductor sales to decrease 12.8% in 2019.

Additionally, the restriction on sales to Huawei is expected to have dampened results of companies like Flex and Qorvo.

Nevertheless, growth in fourth-quarter PC shipments bodes well for companies like Lenovo, HP, and Dell.

Although Apple’s (AAPL - Free Report) MacBook shipment continued to decline per IDC data, the iPhone maker is expected to have benefited from strong demand for Apple Watch 5, AirPods and App Store sales.  

Growth Drivers Aplenty

Tech companies are expected to benefit from the rapid adoption of cloud computing, AI, IoT, cloud-based gaming, wearables, and drones.

Furthermore, solid demand for AI-infused virtual assistants continues to drive demand for smart speakers like Amazon Echo and Google Home.

Moreover, the increasing preference for online gaming, music and video-streaming services is a major growth driver. Further, the proliferation of IoT, which is facilitating connected devices and smart homes, is a key catalyst.

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