The Zacks Analyst Blog Highlights: Apple, Microsoft, Facebook, Google and Amazon
Zacks Equity Research
Updated
For Immediate Release
Chicago, IL – January 04, 2015 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Apple (AAPL), Microsoft (MSFT), Facebook (FB), Google (GOOGL) and Amazon ( AMZN).
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Here are highlights from Thursday’s Analyst Blog:
Technology in 2015: Final Scorecard
Despite the doom and gloom surrounding weak PC and computing sales overall, technology companies made huge progress this year in their penetration of other markets including artificial intelligence (AI), self-driving cars, personal assistants, high-speed Internet and home automation. There were also some breakthroughs in chip-shrinking technologies. And that’s what drove technology stocks higher. Of all the bellwethers, Amazon stock performed the best, followed by Google, Facebook, Microsoft and Apple in that order.
Apple (AAPL) stock didn’t do as well as in the past, what with shrinking iPad sales and the perennial fear of a slowdown in iPhones, on which it is highly dependent. No matter how well it does in China, Apple investors remain wary of the country’s growth prospects and its possible impact on iPhone sales.
With chances of tax rates escalating in Europe, investors have turned pessimistic about the company’s growth. But that hasn’t stopped Apple from deepening its ties with IBM to take its devices to the enterprise. Nor did it prevent it from announcing Apple Music and Apple Pay, both of which appear to have made a good start.
The company also made a splash in the wearable tech market with Watch, growing quickly into the number two player despite its late entry. Apple has also stepped up its self-driving car initiative which it expects will hit the roads by 2019. Asian expansion strategies also continue in full steam.
This has been a huge year for Microsoft (MSFT), in which investor perceptions of the company improved dramatically. The no-nonsense attitude of the current CEO in writing down Nokia, developing Surface, pushing strongly into the future with Windows 10 (eventually to be provided as a service), bundling services with Office 365 to take legacy workloads to its cloud and simultaneously increase cloud revenue have all worked in its favor.
Microsoft’s cloud infrastructure business is second only to Amazon’s and that position is likely to hold steady in the foreseeable future. The weakest link seems to be the phone business, but there may be developments next year. Xbox 1 has also lagged PS4 in sales although its decision to allow backward compatibility for many games makes it a rather attractive platform at the moment. Microsoft also made advancements in virtual reality with its HoloLens headgear and partnerships with NASA and Facebook’s Occulus are also encouraging.
The primary reason for the appreciation in Facebook ( FB) stock is its growing ad revenue. And investors have finally come to terms with the fact that teens aren’t running away, or if they use it less in their younger years, they usually come back to it later on. Plus the fact that Facebook is really strongly positioned in several fast-growing markets of Asia, particularly India.
Facebook has a number of initiatives in place (Internet.org, Facebook Lite) for the limited or slow connectivity in these regions and it also has in the works a huge drone to beam Internet connections.The growing engagement on the platform enables it to charge higher rates of advertisers and also enter into strategic relationships with publishers and sellers.
Some notable announcements this year were Instant Articles, Buy Buttons and Storefronts that bring news, advertisers and ecommerce right into the app. It also launched Facebook Messenger and stepped up work in AI. And if all this isn’t enough, the company is getting more active in the development of networking chips that can reduce development cost by open sourcing the technology it develops.
Enthusiasm for Google (GOOGL) stock picked up right through the year and at first it seems a bit inexplicable given its persistent troubles with the EU, pricing pressures in the core business, Android’s share loss to iOS and competing operating systems cropping up with competitor support. But Google is a pretty consistent performer across the board.
Despite Microsoft’s many efforts to dismantle it in search, it’s Yahoo that is actually headed out. Bing can do some damage given its close integration with Windows 10 and this is an area that bears tracking next year. Google’s Chromebook is edging out rivals in academics and at the enterprise, it now has some snazzy devices of its own.
Google also offers cloud infrastructure services and next year could see it disclosing some numbers. On the entertainment front, Google’s YouTube added a number of music streaming programs including a subscription-based model. It also offers YouTube Gaming for sports enthusiasts. For video, it added to the Chromecast line this year. Google also introduced app indexing, added a Buy button and redid its Play Store to spur its ecommerce efforts this year.
Nest also signed a few important agreements with utility companies to boost its position in home automation. Google’s restructuring itself into Alphabet, the spin-off of its efforts in healthcare and auto, its increased focus on Internet services through Loon and Fiber and home automation through Nest all seem to indicate that the company is on its way to becoming a large scale conglomerate.
Amazon (AMZN) has been the star performer this year mainly because its AWS revenue, profits and growth rates far exceeded investor expectations. The company barely made profits last year as it spent heavily on building out capacity, but starting this year, AWS is a full-fledged business. That doesn’t of course mean that the traditional business has taken a back seat.
The bulk of the revenue still comes from retail and Amazon is making strides, both consolidating its position in traditional markets and building position in emerging ones like India. The company is also building drones and reportedly buying aircraft with a view to consolidating its logistics operations and taking out inefficiencies. This could be capability it will sell in the future, who knows?
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