Over the years, Wall Street has produced some incredible analysts, but also some that still reside in the analyst Hall of Shame for various nefarious reasons. One thing is for sure: Those that dig the deepest into their respective sectors often provide the best and most comprehensive views of the top companies, and more importantly, in many cases the up and coming companies.
Jefferies recently signed one of the top players on Wall Street to join the firm’s research department. Brent Thill, who was formerly the number one rated software analyst at UBS, comes to the firm, and his first effort is a massive 200-page primer on the sector. The gigantic report focuses on cloud computing, the shift to digital advertising and the convergence of the internet and software. He also looks closely at e-commerce, online travel and the huge video game arena.
Thill also came out with 10 top predictions, many of which might surprise tech investors. We present those, along with associated stocks.
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1) Facebook Inc. (NASDAQ: FB) will outperform Alphabet Inc. (NASDAQ: GOOGL) and Amazon.com Inc. (NASDAQ: AMZN) over the next 12 months.
2) Facebook will grow its reach of the global population to nearly 40% by 2022. That’s compares with about 25% today. He thinks that will add 50% upside to global average revenue per viewer.
3) Digital video consumption will grow to 50% of time spent from 20% by 2022. He thinks this will cause a big disruption in the $200 billion global TV advertising market. Players in this arena are Facebook, Alphabet, Snap Inc. (NASDAQ: SNAP) and Trade Desk Inc. (NASDAQ: TTD).
4) Amazon’s AWS cloud service will grow to a staggering $55 billion in revenue by 2022. He estimates the company’s market cap will close in on the $1 trillion.
5) 2018 will be the breakout year for Alphabet’s Google Cloud.
6) Artificial intelligence, or AI as it is called, has a ton of hype, but only a select few winners will emerge. He cites the companies with the most robust and dynamic data sets, and those include Amazon, Alphabet and Facebook.
7) Amazon will jump into the $100 billion gaming market and will launch a video game streaming service by 2020. This could be positive for Activision Blizzard Inc. (NASDAQ: ATVI), Electronic Arts, Inc. NASDAQ: EA) and Take Two Interactive Software Inc. (NASDAQ: TTWO).
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8) The travel arena has no winner-take-all player. The analyst says to own a basket of companies, including Priceline Group Inc. (NASDAQ: PCLN) and Expedia Inc. (NASDAQ: EXPE).
9) The analyst feels there could be some substantial outperformance from the small business stocks, like Intuit Inc. (NASDAQ: INTU), Wix.com Ltd. (NASDAQ: WIX) and Yelp Inc. (NYSE: YELP).
10) A stunning 50% of all dates will begin online by 2022. Stocks like Match Group Inc. (NASDAQ: MTCH) and IAC/InterActiveCorp (NASDAQ: IAC) could be the big winners here.
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Ten incredible predictions, some of which are game-changers and some of which may take as many as five years or more to fully play out. One thing is for sure, the only guaranteed item is that change is a definite, and it will be huge going forward.
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