- In the last three months, both Facebook and Apple shares have plunged over 20 percent. Amazon and Netflix haven't fared much better, and even the relatively-stable Alphabet is trading down 15 percent.
- Meanwhile, Wall Street analysts have identified five other technology stocks that are poised for big gains.
- TipRanks' Stock Screener searched for tech sector stocks with a strong buy consensus from the Street's best-performing analysts over the last three months.
The so-called FAANG stocks are still looking pretty precarious right now. In the last three months, both Facebook and Apple have plunged over 20 percent. Amazon and Netflix haven't fared much better, and even the relatively-stable Alphabet is trading down 15 percent.
So let's look past FAANG stocks for a moment. There are plenty of other compelling technology plays out there.
TipRanks' Stock Screener searched for tech sector stocks with a strong buy consensus from the Street's best-performing analysts over the last three months. The Street is bullish on the following five tech names — and not one of them starts with F, A, N or G.
Software giant Microsoft is one of the Street's clear tech favorites right now. Out of 19 top analysts polled in the last three months, 18 had a bullish sentiment on the stock. Only one analyst, Jefferies' John Difucci, has a sell rating. Meanwhile the $125 average analyst price target indicates compelling upside potential of over 17 percent.
KeyBanc's Brent Bracelin (Track Record & Ratings) cited Microsoft's fast-growing cloud and internet businesses that could top $70 billion in revenue by 2020, up from $18.5 billion in 2016. "We would continue to Overweight MSFT shares on a multiyear model transformation driven by fast-growing cloud and internet segments," he wrote on Oct. 24.
He boosted his price target to $125 from $123, citing Microsoft's impressive $1.2 billion revenue beat for the first quarter 2019. This marked the fifth consecutive quarter of double-digit growth for the world's largest software maker. Meanwhile improving margins across all three main segments (office products and cloud growth, server products and cloud growth, and gaming) contributed to an easy 18 cent EPS beat.
Bracelin joins several other analysts who are growing increasingly bullish on Microsoft. Oppenheimer's Timothy Horan called the quarter a "knockout" while Bank of America's Kash Rangan described Microsoft's growth as "phenomenal."
Analysts see a strong buying opportunity in payments stock PayPal. Since the beginning of the week, three analysts have reiterated their PayPal buy ratings.
These analysts are sticking to their bullish calls despite a Wall Street Journal report suggesting PayPal experienced unexpectedly high fraud losses with its Venmo digital money transfer service.
"While the WSJ story on unexpected fraud losses is a bit unsettling, we think it is more surprising that the information became public," Buckingham analyst Chris Brendler (Track Record & Ratings) wrote on Nov. 26. "Innovative payments companies are constantly testing and learning new products/features so we're more concerned how/why this story came public."
Five-star Cantor Fitzgerald analyst Joseph Foresi (Track Record & Ratings) sets out the bull picture in his Oct. 23 report. He pointed to its higher-than-industry growth rate and dominant position in online payment processing. "Fundamentally, we believe PayPal can grow at roughly double the market average, supporting its premium to the group."
He reiterated his PYPL buy rating with a price target of $101, 23 percent above its current price.
In total, this strong buy stock has snapped up 19 top analyst buy ratings versus four hold ratings over the last three months. This is with a $100 average analyst price target.
VMware, the cloud computing subsidiary of Dell, is the leading provider of virtualization solutions for businesses. Shares are already up 21 percent year-to-date. And according to the Street, plenty of upside potential still lies ahead.
This is a strong buy tech stock with six recent buy ratings and one hold rating. Meanwhile the average top analyst price target of $180 translates into upside potential of over 18 percent.
Analysts approve of VMware's acquisition of Heptio, announced earlier this month. Terms of the detail were not disclosed, but the startup had been valued at $117 million by PitchBook back in 2017.
With Heptio, VMW can boost its offerings for the open-source system Kubernetes. Two of the three creators of Kubernetes went on to found Heptio and will now join the VMware team.
For Jefferies' analyst John DiFucci (Track Record & Ratings), the deal is a savvy move, as it "fits squarely into the company's broader Software-Defined Data Center strategy." He keeps a buy rating on the shares with a $186 price target, representing 22 percent upside.
Keep a close eye on T-Mobile, whether or not the Sprint deal goes ahead. The proposed $26 billion merger could close by as early as the first quarter 2019, though the second quarter remains more likely.
"T-Mobile is the third-largest wireless carrier in the US, capturing 100% of the industry growth since 2013" writes five-star Oppenheimer analyst Timothy Horan (Track Record & Ratings). He places the share gains down to a greatly improved network coupled with innovative marketing to underserved urban and rural communities.
Plus Horan sees the Sprint merger substantially increasing the companies' pro forma value through $6 billion in synergies. "We continue to believe a combined TMUS/S can greatly improve network quality and match VZ's firm value, which could mean a 2-3x increase in the stock in five years" the analyst says.
With this in mind, Horan reiterated his T-Mobile buy rating on Nov. 5 with a Street-high $90 price target, which is 33 percent above the current price.
In total, five out of six top-ranked analysts are bullish on the strong buy stock.
Salesforce calls itself the world's No. 1 customer relationship management platform. Right now, the stock is buzzing following the release of strong earnings results that beat expectations.
Business remained very solid in the third quarter, with total revenue of $3.39 billion up 26 percent year-over-year. And while guidance for the fourth quarter came in mixed, Salesforce gave very encouraging guidance for both 2019 and 2020.
"We see salesforce.com's F3Q results and improved outlook supporting our bull thesis on the customer engagement opportunity" writes top Oppenheimer analyst Brian Schwartz (Track Record & Ratings). He reiterated his buy rating on Nov. 28 with a $180 price target (40 percent upside potential).
An economic slowdown could hamper software sales, but companies are still expected to make it a top spending priority next year, "and this causes us to favor CRM in large-cap technology," the analyst wrote.
Overall, Salesforce has a very positive Street rating right now. Out of 30 analysts rating the stock, 28 are bullish with only two analysts staying on the sidelines. The $173 average analyst price target translates into 36 percent upside potential from current levels.