Buy the dip on tech stocks like Apple and Nvidia ahead of earnings, Morgan Stanley says

Published Sat, Apr 27 20249:26 AM EDT

There's still plenty of big tech-related stocks to buy ahead of earnings, Morgan Stanley said recently. The firm said investors should buy the weakness in stocks like Nvidia and Apple before the companies deliver their quarterly results. CNBC Pro combed through Morgan Stanley research to find stocks the firm likes as earnings season continues. The stocks include: Dell, Nvidia , Keysight Technologies , Apple and Fortinet. Nvidia The firm said it's standing by shares of the AI chipmaker ahead of earnings in late May. Analyst Joseph Moore sees a slew of positive catalysts that could drive share gains in the months ahead. "NVDA continues to see strong spending trends in AI, with upward revisions in demand from some of the newer customers such as Tesla and various sovereigns," the firm wrote. Moore said his checks show demand remains high for the company's graphic processing units also known as GPUs. Nvidia's data center business is also firing on all cylinders, he added. "We expect a beat to consensus for the April quarter and strong guidance, setting the stage for another series of positive EPS revisions," he went on to say. Shares are up a whopping 77% this year, but the firm said it still sees plenty of upside. Keysight Technologies The electronic test equipment and software company is another standout, according to the firm. "Within the T & M [test & measurement] space, we believe KEYS is best positioned to capitalize on the AI / ML tailwind given exposures across the various layers of networks including physical, protocol, and application," analyst Meta Marshall wrote. Keysight is well positioned for share gains with a diverse portfolio attractive to investors, she said. "The company has [the] broadest set of customers across semi, componentry, traditional networking and hyperscalers, which combined with their depth of portfolio, should make them a share gainer in AI, " she wrote. Meanwhile, shares of the company are down around 7% this year with plenty room to run, the firm said. "We remain [overweight] KEYS as we believe valuation today fails to credit double-digit earnings growth story and defensive end-market exposures," Marshall said. Keysight is scheduled to report its results in May. Fortinet Fortinet is scheduled to report earnings on May 2 and Morgan Stanley continues to pound the table for the stock. Analyst Hamza Fodderwala said he's getting more bullish on the cybersecurity company after attending a recent user conference. "Net, we see upside to Q1 estimates and remain confident in 2H topline acceleration," he wrote. In addition, the firm's survey checks indicate demand remains steady. "Our partner conversations indicated more stability in overall demand after a turbulent 2H'23," he noted. Fodderwala also says Fortinet has "regulatory tailwinds" and that the need to secure critical infrastructure means bookings remain "strong." "Nearing the trough, poised to accelerate in 2H," he said succinctly. Fortinet shares are up nearly 10% this year. Dell "The strength of AI server orders, backlog, pipeline, and expanding CSP/enterprise [cloud service provider] customer base show DELL's AI story is early days and gaining momentum. ... Guidance suggests margins will be pressured Y/Y, but we believe mgmt's rev/EPS outlook is conservative; our FY25 EPS is 3% above the high-end of the guide. Further momentum in the AI server narrative, PCs inflecting to growth and S & P 500 inclusion remain key upcoming catalysts." Apple "We believe Apple will slightly beat Mar Q ests, but guide to June Q revs/implied EPS 4-7% below Street. At $165, this appears priced in but in today's volatile market, it's a tricky setup. That said, with Apple's biggest WWDC ever on June 10th, we'd buy post-earnings weakness. Remain OW; $210 PT." Fortinet "Nearing the Trough, Poised to Accelerate in 2H. ... Net, we see upside to Q1 estimates and remain confident in 2H topline acceleration. ... Our partner conversations indicated more stability in overall demand after a turbulent 2H'23. ... With growing regulatory tailwinds around securing critical infrastructure, demand for Fortinet OT [operational technology] security ( > 10% of bookings) remains strong." Nvidia "NVDA continues to see strong spending trends in AI, with upward revisions in demand from some of the newer customers such as Tesla and various sovereigns. ... We expect a beat to consensus for the April quarter and strong guidance, setting the stage for another series of positive EPS revisions. ... We believe that NVIDIA should trade at a premium given its higher probability of upward revisions in the near term." Keysight Technologies "Within the T & M space, we believe KEYS is best positioned to capitalize on the AI / ML tailwind given exposures across various layers of networks including physical, protocol, and application. ... The company has broadest set of customers across semi, componentry, traditional networking & hyperscalers, which combined with their depth of portfolio, should make them a share gainer in AI. ... We remain OW KEYS as we believe valuation today fails to credit double-digit earnings growth story & defensive end-market exposures."