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Bet on These 4 Hot Tech Stocks Instead of Micron (MU)

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Micron Technology MU stock has had an impressive run on the bourse over the last year. Shares of the memory-chip maker have rallied 49.2%, significantly higher than the S&P 500’s gain of 29.7%.

Micron is benefiting from the strong memory-chip demand from personal computer (PC) manufacturers, smartphone makers and data-center operators. The COVID-19 pandemic-induced restrictions and social-distancing measures are spurring demand for PCs and notebooks, as more and more workers and students are now working and learning from their homes.

The work-and-learn-from-home necessity is also stoking demand for cloud storage. Furthermore, the social-distancing trend has boosted the usage of online services globally. Therefore, the data-center operators are enhancing their cloud-storage capacities in a bid to accommodate the skyrocketing demand for cloud services, which is, again, fueling demand for memory chips.

Additionally, solid recoveries in sales across the smartphone and automotive industries are also spurring demand for Micron’s memory chips.

Despite the solid demand for its memory chips, Micron’s near-term prospects look gloomy due to the industry-wide supply-chain constraints. During its recently-reported fourth-quarter fiscal 2021 earnings conference call, the memory chip maker stated that it is witnessing supply constraints for certain IC components, which might somewhat negatively impact bit shipments in the near term.

The company also expects that bit shipments for the DRAM and NAND memory chips will decline in first-quarter fiscal 2022, as PC manufacturers are adjusting their memory and storage purchases due to the shortage of other components to complete PC assembling.

Considering the negative impact of supply-chain constraints, it is therefore advisable to stay away from this Zacks Rank #5 (Strong Sell) stock in the near term.

4 Tech Stocks to Buy Instead of Micron

Though Micron’s prospects might not appear appealing at the moment, there are several stocks in the technology sector that offer good investment opportunities right now. These stocks have a favorable combination of a Growth Score of A or B, and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Per the Zacks’ proprietary methodology, stocks with this favorable combination offer good investment opportunities.

Dropbox DBX is riding on the growing demand for its cloud-based team collaboration tools through which users can share files, photos, videos, songs and spreadsheets. This Zacks Rank #2 company’s strong focus on product innovation and introduction of solutions like updated Dropbox Spaces, HelloSign, Passwords, Vault and Computer Backup are anticipated to expand its user base.

The solid demand for cloud storage, triggered by the pandemic-induced work-from-home wave, has been acting as a tailwind for the company. Further, integration with leading applications like Zoom, Slack and Atlassian will likely expand the Dropbox paying user base.

Additionally, Dropbox’s innovative “Virtual First” initiative, under which employees will work from home majority of the time and meet once in a while for team collaboration, is expected to lower costs. The company’s plan to shift to hiring in low-cost regions is likely to boost profitability.

Dropbox has a Growth Score of A. The Zacks Consensus Estimate for 2021 earnings stands at $1.44 per share, having moved 8 cents north in the past 60 days.

Dropbox, Inc. Price and Consensus

Dropbox, Inc. Price and Consensus
Dropbox, Inc. Price and Consensus

Dropbox, Inc. price-consensus-chart | Dropbox, Inc. Quote

NVIDIA NVDA has been benefiting from the healthy demand for GeForce desktop and notebook GPUs (Graphics Processing Units), which boost its gaming revenues. Moreover, a continuing Hyperscale demand is a tailwind for the company’s data-center business.

Further, NVIDIA’s GPUs are rapidly gaining from the proliferation of artificial intelligence (AI). By applying its GPUs in AI models, the company is expanding its base in other untapped markets like automotive, healthcare and manufacturing.

NVIDIA currently carries a Zacks Rank of #2 and has a Growth Score of B. The Zacks Consensus Estimate for its fiscal 2022 earnings is pegged at $4.20 per share, having been revised 5.8% upward in the past 60 days.

NVIDIA Corporation Price and Consensus

NVIDIA Corporation Price and Consensus
NVIDIA Corporation Price and Consensus

NVIDIA Corporation price-consensus-chart | NVIDIA Corporation Quote

ServiceNow NOW is riding on robust growth in subscription revenues driven by the digital transformation of enterprises. As enterprises continue to cloudify their infrastructure, the company is poised to boost the uptake of its Now platform. Its workflow solutions have been winning customers on a regular basis.

Further, ServiceNow’s expanding global presence, solid partner base and strategic buyouts are expected to bolster its growth prospects. Based on the strong adoption of its digital workflow solutions, ServiceNow predicts the 2021 subscription billings to grow year over year. Also, strategic alliances with the likes of Microsoft remain tailwinds.

The stock currently carries a Zacks Rank #2 and has a Growth Score of B. The Zacks Consensus Estimate for 2021 earnings has been revised upward by couple of cents to $5.80 per share in the past seven days.

ServiceNow, Inc. Price and Consensus

ServiceNow, Inc. Price and Consensus
ServiceNow, Inc. Price and Consensus

ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote

Arrow Electronics ARW is benefiting from the solid uptrend in design activity across all regions. A strong momentum in the infrastructure software, next-generation hardware and hybrid cloud architectures is encouraging as well.

Arrow’s core strength of providing the best-in-class services and easy-to-acquire technologies will fuel its growth in the future. Its continued focus on boosting the Internet of things capabilities are helping it expand in newer markets and gain customers.

Furthermore, the latest forecast for the worldwide IT spending by Gartner is a positive for Arrow. The worldwide IT spending is anticipated to be $4.2 trillion in 2021, suggesting an increase of 8.6% from 2020. The research firm projects the worldwide spending on IT services to be up 9.8% year over year to $1.18 trillion this year.

Arrow currently carries a Zacks Rank #2 and has a Growth Score of B. The Zacks Consensus Estimate for 2021 is pegged at $13.51 per share, which has been revised 13.4% upward over the past 60 days.

Arrow Electronics, Inc. Price and Consensus

Arrow Electronics, Inc. Price and Consensus
Arrow Electronics, Inc. Price and Consensus

Arrow Electronics, Inc. price-consensus-chart | Arrow Electronics, Inc. Quote


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Micron Technology, Inc. (MU) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Arrow Electronics, Inc. (ARW) : Free Stock Analysis Report

ServiceNow, Inc. (NOW) : Free Stock Analysis Report

Dropbox, Inc. (DBX) : Free Stock Analysis Report

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