Artificial Intelligence Selects Activision Blizzard As A Thematic Stock Highlight This Week
Tech stocks declined today following last week’s sell-off – partly fueled by Elon Musk doing what he does best on Twitter – with the Nasdaq NDAQ composite hitting losses of 1% in the early afternoon. Though prices may be dropping, we here at Q.ai can’t think of a better time to go all-in on this week’s thematic screen: the tech Top Buys for the month of May.
Q.ai runs factor models daily to get the most up-to-date reading on stocks and ETFs. Our deep-learning algorithms use Artificial Intel INTC ligence (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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Activision Blizzard (ATVI)
Activision Blizzard ATVI , the famous videogame company responsible for the popular Call of Duty franchise, bumped down 0.07% on Friday to $93.35 with 3.6 million trades on the books, though it remains up over 4.3% YTD.
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The company peaked in Q1 following strong performance in their CoD franchise, spurred on by the introduction of mobile play that brought their active monthly user base to 150 million. Success from their King Digital and Blizzard Entertainment divisions saw games like Candy Crush and World of Warcraft prop up their performance – and stock prices – although the stock has trended down from their most recent high.
Activision’s fiscal 2020 was a busy one: the company saw revenue increase by 6% to $8 billion, with operating income popping 6.7% to $2.8 billion – almost a $1 billion increase over the last three years. EPS rose almost 5% to $2.82, though ROE fell from 17.7% to 15.7% in the three-year period. Currently, Activision is trading with a forward earnings ratio of 25x.
Due to its excellent performance and potential for expansion with such popular franchises as Call of Duty, our AI thinks fondly of Activision, rating the company A’s in Technicals and Low Volatility Momentum and C’s in Growth and Quality Value, bringing the videogame developer to Top Buy status for the month of May.
Qualcomm, Inc (QCOM)
Qualcomm closed up 2.4% on Friday to $130.15 per share, banking 9.3 million trades by EOD. The semiconductor, software, and wireless technology services company is down almost 12% for the year.
Qualcomm’s woes this month are not entirely their own – the company is trending downward due to repeat rumblings that Apple AAPL is looking to release their own 5G modem by 2023, despite the iPhone maker’s licensing agreement with Qualcomm that extends through April of 2025. While this shouldn’t be a surprise to investors (given that Apple bought their modem business from Intel way back in 2019), the market appears wary that this future problem could pose risks to Qualcomm’s bottom line.
But investors needn’t worry. Qualcomm had a banner 2020 heading into the new fiscal year, with revenue up 25% to $23.5 billion and operating income exploding 43.2% to $6.23 billion. Their EPS also grew by 54.5% to $4.52 in per-share earnings, with ROE tripling to 94% from 31% three years ago.
Qualcomm is expected to experience modest revenue growth of 4.8% in the next twelve months, and is currently trading with a forward 12-month P/E of 16.15. Our AI believes that this is a company worth your investment dollars: Qualcomm, Inc QCOM is rated Top Buy for the month of May, with A’s in Quality Value and Growth and C’s for Technicals and Low Volatility Momentum.
Cirrus Logic, Inc (CRUS)
Cirrus Logic, Inc CRUS closed up 1.6% on Friday, closing out the week at $74.55 per share and 354,000 trades. Though Friday ended the week on a good note, Cirrus Logic is still down 11.4% YTD, due in part to the semiconductor manufacturer’s fourth-quarter earnings that fell short of Wall Street estimates two weeks ago. The stock has been declining since on news that Q4 sales dropped 5%, with Q1 revenue guidance set 8% below Wall Street projections.
But the company has a strong future with new opportunities upcoming, including a new integrated circuit that is likely to be a cornerstone of the flagship Apple phones in fall 2021. Cirrus Logic is also expecting a boost from their collaboration with Elliptic Labs, a global AI software company using Cirrus to certify and optimize their AI Virtual Smart Sensor Platform for smartphone, PC, and IoT customers.
Furthermore, Cirrus Logic experienced a solid 2020 despite the pandemic, with revenue up 5.8% to $1.28 billion. Their operating income grew by 25% in the same period to $195 million, though this is down from their $262 million operating income three years ago. All told, Cirrus Logix experienced per-share earnings growth of 27.5% to $2.64, with ROE ticking down to 13.46%.
Cirrus Logic, Inc. has been bolstered by their strong performance, climbing demand, and brand partnerships. With a forward 12-month P/E of 16.11, our AI sees good things in store for them, rating the semiconductor company Top Buy with A’s in Growth and Low Volatility Momentum and B’s in Technicals and Quality Value.
Keysight Technologies, Inc (KEYS)
Keysight Technologies KEYS is one of those companies that doesn’t crop up in common parlance often, but they perform a critical role: manufacturing the electronics test and measurement equipment and software that clears your favorite tech to be delivered to your doorstep. The company is slated to report second quarter fiscal 2021 results on 19 May – and in anticipation of their expected favorable performance, we thought we’d take a look at what their last year has brought to the table.
Keysight Technologies closed up 1.3% on Friday to $139.85, bringing YTD gains to 6.6%. Their last year saw revenue growth of 2% to $4.2 billion, with operating income resting at $777 million – a total rise of 4.6% over the fiscal twelve months.
Though EPS experienced slower growth in the last year, not even scratching 2%, the last three years have seen per-share earnings quadruple from $0.86 to $3.31, with ROE tripling to 19.9%. Keysight Technologies is currently trading with a forward 12-month P/E of 24.23.
Keysight Technologies’ robust 2020 performance benefited from continued momentum in smartphone processors, high-performance data center growth, and high-speed networking needs. These, combined with acceleration in chip design activity, are expected to positively contribute to their performance. And as remote work and online learning proliferate (with IBM planning to downscale its 50 million square foot building to a mere 150,608 on anticipation of permanent changes), Keysight has also bolstered their software testing capabilities.
Once again, our AI sees solid growth and possible chances for investor gains in Keysight Technologies, rating the company Top Buy for the month of May with B’s in Technicals and Growth and C’s in Low Volatility Momentum and Quality Value.
KLA Corporation (KLAC)
KLA Corporation KLAC closed up 3.33% on Friday, ending the week at $305.75 per share with 1.5 million trades on the books. The capital equipment company is up 18% YTD, despite recent declines in stock prices after reporting solid fiscal 2021 Q3 earnings two weeks ago, with total earnings up $1.8 billion.
Said President and CEO Rick Wallace at the time, “KLA’s March quarter results demonstrate strong momentum…. We have seen a sharp increase in business levels in each of our major end markets, driven by secular demand trends across a broad range of semiconductor markets and applications.”
KLA Corp’s positive 2021 Q3 earnings report followed a robust fiscal 2020, which saw the company increase revenue by 11% to $5.8 billion, with operating income growth topping out at 26% to almost $1.76 billion. Expansions in their bottom line also extended to per-share earnings, which ballooned 54.7% in the last fiscal year alone to $7.70. And though their ROE fell in the last three years, it remains around a hefty 45%.
KLA Corp is expected to continue this upward trend in future earnings reports, with forward revenue growth of 12.6% predicted over the next year. The company is currently trading with a forward 12-month P/E of 18.35.
With a year of growth behind them and a bright future going forward, our AI rates KLA Corp a Top Buy for May, with an A in Low Volatility Momentum, B’s in Growth and Quality Value, and D in Technicals.
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