Stock markets are in turmoil following recent macroeconomic upheavals like soaring inflation, rising interest rates and geopolitical conflict, while stocks in the technology sector have particularly taken a beating.
The technology-heavy Nasdaq 100 (NDX) has tanked 24.9% so far this year. While the FAANG stocks including Meta Platforms (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Alphabet (GOOGL) have dropped 41.3%, 33.7%, 19.2%, 68.6% and around 20%, respectively.
In this scenario, which technology stocks can investors invest in or sell off? The TipRanks Analysts’ Top Stocks tool provides the answer. This tool helps investors look at stocks with a ‘Strong Buy’ or ‘Strong Sell’ consensus rating, according to the best performing analysts on TipRanks.
Investors can look at the top-rated stocks across eight sectors including utilities, technology, consumer goods, industrial goods, services, basic materials, financial and the healthcare sectors. The technology sector looks at 782 stocks with 203 stocks rated as Strong Buy.
Micron Technology (NASDAQ: MU)
Micron is the fourth largest semiconductor company in the world in terms of revenues, excluding IP (intellectual patents) or software revenues. The company’s portfolio of memory and storage products includes DRAM (dynamic random-access memory), NAND, and NOR products under its Micron and Crucial brands. DRAM accounts for more than 70% of the company’s revenue.
Last week, the memory and storage products company hosted its Investor Day. Mizuho Securities analyst Vijay Rakesh came away bullish on the stock following the conference as he believes that MU is “positioned well to execute on a strong roadmap ahead with secular above-trend growth drivers in Datacenter and Auto/Industrial.”
The analyst elaborated further and pointed out that growth in Datacenters is driving the demand for DRAM products. Rakesh added that with the total addressable market (TAM) for Datacenters estimated to be worth $170 billion, the analyst thinks that for MU, the split would be 60/40 between DRAM and NAND products.
This is also supported by the fact that in fiscal Q2, Micron’s data center revenues jumped more than 60% year-over-year “supported by robust demand across our DRAM and SSD [solid state drive] portfolio.”
Another end market where Micron is in a strong position is the automotive and industrial end markets. The company’s management stated on its Q2 earnings call that currently, more than 10% of MU’s revenues comes from this market and in “fiscal Q2, our auto revenue set a new record driven by robust demand for memory and storage.”
At its Investor Day presentation, MU added that between 2021 to 2025, it expects DRAM bit demand to grow at a Compounded Annual Growth Rate (CAGR) in the mid-to-high teens while NAND bit demand is expected to be in the high 20s percentage.
Considering the strong demand growth drivers for its products, the analyst is upbeat about the stock with a Buy rating and a price target of $113, implying an upside potential of 57.1% at current levels.
Micron is also one of the best value stock picks on TipRanks.
Other analysts on the Street side with Rakesh and are also bullish with a Strong Buy consensus rating based on 13 Buys and two Holds. The average MU stock forecast is $112.50, implying that the stock has an upside potential of 56.42% at current levels.
Duolingo (NASDAQ: DUOL)
Duolingo is a global mobile learning platform that offers courses in around 40 languages with 45 million active users each month. The company’s flagship app has over 500 million downloads. Duolingo’s app is available on both the Google Play and the Apple app store.
The stock recently rose about 34% by Friday’s close following strong Q1 results.
The language-learning platform’s total revenues soared 47% year-over-year to $81.2 million and exceeded the consensus estimate of $77.4 million. Net loss came in at $0.31 per share, much narrower than the analyst estimates of a loss of $0.57 per share.
Luis von Ahn, Co-founder and CEO of Duolingo, commented on the results, noting that “We believe these results come from the investments we’ve made in R&D to drive innovation and continuously make our products more effective, more fun, more engaging, and more social. Thanks to our strong results this quarter, we are increasing our guidance for bookings, revenue, and adjusted EBITDA for the full-year 2022.”
Following the upbeat results, Evercore analyst Mark Mahaney remained optimistic about DUOL and called it a “Covid Winner” with its paid subscriber additions soaring to 400,000 in Q1 from 325,000 in Q4.
Duolingo ended Q1 with paid subscribers of about 2.9 million, up 60%. The company’s subscription revenues increased 45% year-over-year with revenues of $58.01 million.
The analyst is of the view that DUOL’s business model is “robust” with plenty of near to medium term “GCIs (Growth Curve Initiatives) to potentially unlock – Math, ABC, Duolingo for School (40% of U.S. language teachers use DUOL!), Advertising revenue, DET [Duolingo English Test].”
As a result, Mahaney has a Buy rating and a price target of $120 on the stock, implying an upside potential of 33.7% at current levels.
Other analysts on the Street are also upbeat with a Strong Buy consensus rating based on six Buys and two Holds. The average Duolingo stock forecast is $109.25, implying that the stock has an upside potential of 21.7% at current levels.
Bottom Line
It is evident from the above list that even in such a volatile market, there are still stocks that are value buys and that can provide significant upside potential to investors. The Top Analysts of Wall Street are the ones doing their homework, and TipRanks is there to check them.
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