One of the most obvious side effects of the COVID-19 pandemic was the acceleration of trends that support consumers while making the most of their time at home. E-commerce, gaming, and streaming of music and video have all emerged as the clear winners of the Stay-at-Home economy.
Investors have avoided some of the biggest winners, however, concluding that they cannot go higher, only to find that these ongoing trends and the companies that engage them are likely to continue to benefit for the foreseeable future. It only takes 30 days to change a habit, and with the lockdowns now exceeding six months, many of the recently adopted behaviors will continue into the months and years ahead.
Here are three topnotch technology stocks that are still buying – even after their stunning successes so far in 2020.
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Amazon: So many ways to flourish
When Amazon.com (NASDAQ: AMZN) first reported its first-quarter results to close in April, investors were surprised by CEO Jeff Bezos’ statement that the company would spend its entire $ 4 billion in expected second-quarter operating profit on COVID-related expenses – concluding that the r would not be a profit for the quarter.
While that was certainly a logical conclusion to draw, Amazon has always played by a different set of rules. As I recalled in early May, Bezos was “playing the long game,” a strategy that had served the company well.
Amazon surprised many investors last month when it reported net sales in the second quarter that increased by 40% year-on-year, from 26% profit in Q1. More importantly, the company generated more than $ 5.2 billion in net revenue – even after spending “more than $ 4 billion in incremental COVID-19 related costs.”
It’s not just e-commerce that drives Amazon higher. The company is the leader in cloud computing, which continues to gain momentum from hiring remote work. Amazon Prime Video and Prime Music entertain families on lockdown, while their streaming platform Twitch video games is the industry leader.
With so many ways to win, Amazon is as close to a no-brainer stock as you can get when it comes to staying tech stocks-at-home.
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NVIDIA: The choice for serious gamers and cloud operators
Another sector that has received a boost from the stay-at-home economy is that of gaming. While video game publishers are certainly one way to play the trend, own shares of NVIDIA (NASDAQ: NVDA) is a broader way to profit.
When it comes to gaming, no other graphics processing unit (GPU) holds a candle to NVIDIA, which is still the top choice of serious – and even more casual – gamers everywhere.
Gaming still accounts for the majority of NVIDIA’s revenue (around 43% in the first quarter), but its GPUs are also the top choice in the world’s leading data centers, cloud computing, and artificial intelligence operations. The data center segment (which includes all three) grew by 80% over the year and now generates 37% of NVIDIA’s sales, up from 29% in the previous year.
It is not just gaming that has received a boost from the pandemic, as cloud computing has been at the center of the trend towards remote work, another aspect of the stay-at-home economy. In fact, the shift to the cloud that is occurring will be permanent, as the holdouts understand the real benefits of cloud computing, according to research firm Gartner.
NVIDIA has an advantage, as its GPUs currently serve each of the major cloud providers, including Amazon Web Services, Alphabet‘s Google Cloud, and MicrosoftIs Azure, to name just a few. With the potential to continue to benefit from telecommuting and re-increasing lockdowns, NVIDIA should be close to the top of any tech tech’s buying list.
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Netflix: The first name in streaming video
Netflix (NASDAQ: NFLX) may have started sending movies by email, but the “no” in his name was always meant to point to a future of internet delivery. The company has become synonymous with the streaming video it pioneered and has left worlds to be conquered.
Over the years, there have been many predictions that there would eventually be a Netflix killer, but the company that started the streaming revolution is still king of the hill. When people found themselves unlocked at home, they turned to Netflix for help to be away for hours.
Even after a record 15.8 million subscribers in the first quarter, Netflix continued to win conversions, adding a Q2 record of 10.1 million more, a total of 25.86 million so far in 2020. To put that number in context Netflix added just 27.83 million new subscribers for all of 2019. These stellar customer profits drove revenue to $ 6.1 billion in the second quarter, up 25% year-over-year, while net revenue accounted for 165%. In an unexpected turn of events, the company itself turned cash flow positive.
The biggest growth engine for Netflix is its largely untapped international market, which grew by leaps and bounds during the pandemic. While subscriber growth in North America increased by 10% year-on-year, growth in Latin America jumped by 29%, Europe, the Middle East, and Africa (EMEA) grew by 39%, and Asia-Pacific rose by 74%. % up.
This illustrates the global opportunity that remains, especially as the pandemic drags on and the economy of the home stays flourishing.
