Big tech stocks have already enjoyed sharp gains this year and Goldman Sachs says there are more to come this earnings season. Consumer discretionary and energy are a different story, however.
In a note Friday, David Kostin, Goldman's chief U.S. equity strategist, said he expects margins for large-cap tech stocks to remain stable this year after the companies topped estimates for margin expansion in the first quarter, representing an "upside risk to 2Q EPS (earnings per share)."
"Consensus expects Info Tech margins will decline by 31 bp (basis points) in 2Q," Kostin said. Accounting changes by Facebook and Google parent Alphabet will act as "a one time headwind" in the calculation of margins. "However, Info Tech margins beat consensus forecasts in 1Q and we estimate full-year 2017 Info Tech margins will be stable at 19.9%."
Some of the tech stocks expected by Goldman to post strong margin growth this year include Nvidia, Qorvo and Lam Research. Tech names have rallied 17 percent for the year, making them the S&P 500's best performers.