The fourth-quarter earnings results have been pouring in this week, and one thing’s for sure. Many of the top technology stocks that are leaders in their respective subsectors are knocking the proverbial ball out of the park. In addition to delivering some stellar earnings results, many of the companies are very positive on not only the first quarter but also all of 2021 and beyond.

In a series of new reports, the technology team at BofA Securities not only reiterated the firm’s Buy ratings on some of the highest profile technology companies, it also raised price targets as well. With the market pricey, and the potential for a correction very possible, it makes sense to stay with the top companies now. It is also important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Corning

This company continues to be a huge player in the fiber optic world. Corning Inc. (NYSE: GLW) is a technology pioneer that manufactures LCD glass for flat-panel displays for multiple product lines.

Telecommunications (30% of sales) produces optical fiber and cable, component hardware and equipment, and photonic components for the telecommunications, CATV and networking industry. In addition, the company’s Environmental Technologies division (12% of sales) produces specialized glass, glass ceramic and polymer-based products for the automotive industry.

The stock has been a BofA Securities favorite for years. Its report noted this:

Corning reported a strong fourth quarter. Fiscal year 2021 benefits from Display tightness and recovery in Optical. We are optimistic on display given the tightness in the glass market coupled with strong demand and ramping 10.5G Fabs. Specialty Materials growth moderates to low single digit year-over year in fiscal 2021.

Shareholders receive a 2.41% dividend. BofA Securities raised the price target to $44 from $40, while the Wall Street consensus target is $35.70 Corning stock rose over 3% on Thursday to close at $36.44.

The huge social media leader has been on a roll, and the analysts remain very positive. Facebook Inc. (NASDAQ: FB) is the largest social network, with over 2.3 billion monthly active users and over 1.6 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.
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The company’s solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends. Messenger, a messaging application for mobile and web on various platforms and devices, enables people to reach others instantly, as well as enable businesses to engage with customers. WhatsApp Messenger is a mobile messaging application.

The company has been under intense scrutiny lately, with some alleging there has been unreasonable censorship, and it is yet another that may be targeted by either Congress or the Department of Justice, or perhaps both. With that noted, it remains one of the largest and most powerful social media platforms in the world.

The analysts said this:

The company posted a fourth quarter beat with ad revenues growth +30% ex-currency accelerating 7% points year-over-year and 2021 margins estimates likely moving higher. First half outlook strong, but second half outlook still cautious on regulatory uncertainties plus much tougher 2021 second half comparisons. Raising estimates on ecommerce strength and currency, and see upside potential on shopping traction in 2021.

The BofA Securities price target on Facebook stock was raised to $358 from $345. That compares with a $325 consensus target and Thursday’s $273.85 closing price.

Lam Research

This remains one of the top chip equipment picks across Wall Street. Lam Research Corp. (NASDAQ: LRCX) designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits worldwide.

The company offers ALTUS systems to deposit conformal films for tungsten metallization applications, SABRE electrochemical deposition products for copper damascene manufacturing, SOLA ultraviolet thermal processing products for film treatments and VECTOR plasma-enhanced chemical vapor deposition atomic layer deposition products.
Lam Research also provides SPEED gapfill high-density plasma chemical vapor deposition products and Striker single-wafer atomic layer deposition products that provide multiple dielectric film solutions. In addition, the company offers Flex for dielectric etch applications, Kiyo for conductor etch applications, Syndion for through-silicon via etch applications and Versys metal products for metal etch processes.

Lam Research’s Coronus bevel clean products enhance die yield. Its Da Vinci, DV-Prime, EOS and SP address a range of wafer cleaning applications, and Metryx mass metrology systems offer high precision in-line mass measurement in semiconductor wafer manufacturing.
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The analysts love the semiconductor equipment sector for 2021 and said this:

Solid beat and raise, 2021 wafer fab equipment to grow 15%+ ahead of our 10% estimate to a high $60 billion-$70 billion level which is already at 2023 target. We like the 2020 share gains which grew 27% versus WFE up 15-20%; compelling valuation at 18x calendar year 2022 estimated EPS versus semiconductors 22x; solid free-cash-flow return (100%+).

Investors in Lam Research stock receive a 1.02% dividend. The $590 BofA Securities price target was raised to $600. The $484.17 consensus target is less than Thursday’s close at $507.35 per share.

Microsoft

This is a more conservative way for investors to participate in the massive cloud growth and utilization. Microsoft Inc. (NASDAQ: MSFT) manufactures, licenses, and supports a wide range of software products. The company has transformed its business model from a component-driven model (PC, server) to one driven by the need for cloud capacity.

Many Wall Street analysts agree that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offerings, and which continues growing at triple-digit levels. Some have flagged Azure as the biggest rival to Amazon’s AWS service.

Some analysts maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger users. The cloud was big in 2020 earnings reports, and it will remain a growing part of the software giant’s earnings profile.

The legacy software giant posted outstanding results and the analysts said this:

Microsoft reported strong second fiscal quarter results with upside from Azure momentum (+$700 million to our estimate) and Xbox (+$900 million) from new console launch. Commentary on Azure deals >$10 million and enterprise resource planning deployments at large organizations underscore momentum in enterprise for mission critical workloads.

Shareholders receive a 0.93% dividend. The BofA Securities raised its $256 price target to $285, well above the $243.33 consensus target. Microsoft stock closed at $238.93 on Thursday, after close to a 3% gain on the day.

Note that while these top companies are hitting on all cylinders, the market is very rich and, as we saw earlier this week, could be ready for a sizable shakeout correction. Given that, it may make sense to scale buy shares over a few months, just in case the move down is sooner rather than later.

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