Blue-chip stocks are typically large, well-established, and financially sound companies that have operated for many years. Investors perceive blue-chip stocks as safe-haven bets during market turbulence because of their dependable financials. Although these stocks are not immune to market volatility, they are known to rebound quickly.
Additionally, the tech industry has thrived over the past two years due to the increased adoption of technology-based solutions amid the lockdowns and digital transformation trends across sectors. Moreover, the momentum should sustain as more and more companies embrace the cloud, everything-as-a-service (XaaS), and edge intelligence to improve their business models.
The stock market has been on a wild ride lately due to investors’ concern over the Russian invasion of Ukraine, the worsening inflation situation, and the impending interest rate hike later this month. Given this backdrop, blue-chip tech stocks, NVIDIA Corporation (NVDA), salesforce.com, inc. (CRM), and PayPal Holdings, Inc. (PYPL) could be ideal additions to your watchlist now. Wall Street analysts see a more than 45% upside potential in these stocks.
NVIDIA Corporation (NVDA)
NVDA operates as a visual computing company worldwide through two segments: Graphics and Compute & Networking. Its products are used in gaming, professional visualization, data center, and automotive markets. The company also has a partnership with Google Cloud to create AI-on-5G Lab.
Last month, Jaguar Land Rover announced that it had formed a multi-year strategic partnership with NVDA to jointly develop and deliver next-generation automated driving systems plus AI-enabled services and experiences for its customers. With next-generation cars setting in to transform automotive into one of the largest and most advanced technology industries, this partnership should prove strategic for NVDA.
In January 2022, NVDA unveiled more than 160 gaming and Studio GeForce®-based laptop designs, new desktop, and laptop GeForce RTX® GPUs and technologies, and NVIDIA Omniverse™ for creators. These innovations should help NVDA strengthen its position in the gaming ecosystem.
NVDA’s non-GAAP revenue increased 52.8% year-over-year to $7.64 billion in the fiscal fourth quarter ended January 30, 2022. Its non-GAAP operating income grew 76% from the year-ago value to $3.68 billion in the same period. The company reported a non-GAAP net income of $3.35 billion, up 71.2% year-over-year, and its non-GAAP EPS increased 69.2% from its year-ago value to $1.32.
The consensus EPS estimate of $1.29 for the fiscal first quarter ending April 2022 represents a 41.4% improvement year-over-year. The consensus revenue estimate of $8.12 billion for the same quarter represents a 43.4% increase from the same period last year. It has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.
NVDA has gained 83.8% over the past year to close the last trading session at $230.14. It has gained 3.8% over the past six months.
Of the 21 Wall Street analysts that have rated NVDA, 17 rated it Buy, and four rated it Hold. The 12-month median price target of $352.65 indicates a 53.2% potential upside. The price targets range from a low of $245.00 to a high of $400.00.
salesforce.com, inc. (CRM)
CRM develops enterprise cloud computing solutions that focus on customer relationship management (CRM) technology worldwide. It also focuses on cloud, mobile, artificial intelligence (AI), social, and analytics, enabling companies to transform their businesses. It provides its services through direct sales, consulting firms, systems integrators, and other partners.
On March 7, 2022, CRM and Sprout Social, Inc. (SPT) announced their partnership to make it easy for CRM’s customers to manage their entire social media presence through Sprout’s industry-leading social suite. Social media has become a critical element in the evolution of businesses, and this partnership should help CRM to serve its customers better by assisting them to harness the power of social.
In February 2022, CRM announced the launch of Safety Cloud to help businesses and communities get together and create safe in-person experiences with better management of testing, health, and entry protocols. Safety Cloud streamlines COVID-19 testing and health status reporting with agility and security on a single platform. This should be widely in demand as businesses are looking for the best ways for their employees, customers, and partners to get together safely in the new normal.
CRM’s total revenue increased 25.9% year-over-year to $7.33 billion in the fiscal fourth quarter ended January 31, 2022. Its gross profit grew 22.5% from the year-ago value to $5.31 billion.
Analysts expect CRM’s revenue for the fiscal quarter ending April 2022 to come in at $7.38 billion, indicating an increase of 23.8% year-over-year. Also, the company’s revenue is expected to grow 21.2% year-over-year to $32.10 billion in the ongoing fiscal year.
CRM shares have gained 2.2% intraday to close the last trading session at $203.16.
Among the 28 Wall Street analysts that have rated CRM, 24 rated it Buy, and four rated it Hold. The 12-month median price target of $303.19 indicates a 51% potential upside. The price targets range from a low of $225.00 to a high of $375.00.
PayPal Holdings, Inc. (PYPL)
PYPL is a technology platform and digital payments company that enables digital and mobile payments on behalf of merchants and customers worldwide. It provides payment solutions under PayPal, PayPal Credit, Braintree, Venmo, Xoom, iZettle, Hyperwallet, Honey, and Paidy. It operates a two-sided network that links customers around the globe and connects them with merchants.
PYPL’s net revenues increased 13.1% year-over-year to $6.92 billion in the fiscal fourth quarter ended December 31, 2021. Its operating income grew 9% from the year-ago value to $1.05 billion. The company’s net cash provided by operating activities increased 30.9% year-over-year to $1.76 billion over the period. Also, its non-GAAP EPS came in at $1.11, up 2.8% from the prior-year quarter.
Street expects PYPL’s EPS for the fiscal year ending December 2022 to improve 1% year-over-year to $4.65. The consensus revenue estimate of $29.37 billion for the same period represents a 15.8% increase year-over-year. The company also surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 1.7% intraday to close the last trading session at $100.22.
Out of the 37 Wall Street analysts that have rated PYPL, 26 rated it Buy, and ten rated it Hold while one rated it Sell. The 12-month median price target of $182.36 indicates a potential upside of 82%. The price targets range from a low of $107.00 to a high of $245.00.
NVDA shares fell $0.57 (-0.25%) in after-hours trading Thursday. Year-to-date, NVDA has declined -22.95%, versus a -10.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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