Goldman Sachs is getting bullish on tech ahead of key earnings. The firm named a host of stocks it said investors should buy before quarterly results. CNBC Pro combed through Goldman Sachs research to find the firm’s favorite tech names as earnings season heats up. They include Apple , Fiverr, Microsoft and Broadcom. Microsoft Analyst Kash Rangan expects big results from Microsoft when the company issues its fiscal second-quarter report on Tuesday . The firm said it sees a whole bunch of upside ahead as the company ramps up its artificial intelligence efforts. “Particularly, we point to: Commercial M365’s healthy growth profile excluding Gen-AI, Improving PC outlook and the dwindling impact of the optimization narrative that took hold in CY23,” Rangan said. Microsoft 365 is the company’s portfolio of software products. Further, Azure, Microsoft’s cloud computing platform, has big AI potential, according to Rangan. Azure is on track to be a $200 billion business by 2029, he added. Rangan also sees a “healthier backdrop giving way to broader revenue re-acceleration and earnings revision, which could support Microsoft’s current valuation.” Shares of the company are up more than 7% this year. “We believe Microsoft is one of the most compelling investment opportunities in the technology industry and across sectors,” Rangan said. Broadcom Goldman recently reinstated coverage of the semiconductor company with a buy rating ahead of its earnings report in February. The firm said there’s no shortage of positive catalysts for Broadcom after its acquisition of VMware. “In short, we expect strong double-digit revenue growth in the company’s AI-related businesses,” analyst Toshiya Hari wrote. In addition, the VMware deal should “drive operating margin expansion and earnings growth well in excess of the industry average,” he said. Broadcom is well positioned to capture synergies in the deal, driving “above average EPS growth,” Hari added. The analyst is also bullish on Broadcom’s non-AI semiconductors, which he said are poised for a “cyclical recovery.” “We also envision the company’s attractive capital return profile serving as a tailwind to the stock’s relative performance,” Hari said. Meanwhile, Broadcom shares are up about 8% this year, but the analyst said the stock has plenty more room to run. Apple Goldman analyst Michael Ng is standing by shares of the tech giant. The firm named Apple as a top pick in 2024 and a favorite idea heading into earnings on Feb. 1 . In particular, Ng thinks that Apple Services, which includes Apple TV+, App Store and Apple Music, have revenue growth upside even in the face of a tougher consumer-facing macro. Apple’s track record of product innovation should also continue, according to Ng, as the iPhone cycle begins again, along with new devices like the Apple Vision Pro . The stock, which Ng calls a “high quality” compounder, sits on Goldman’s prestigious conviction buy list. The analyst noted that Apple outperformed the market in 2023, with shares ending the year up about 48.2%. That compares to the S & P 500’s 24.2% jump in the same period. Apple is flat in 2024, but Ng sees more upside ahead. “Apple should also benefit from a recovery in industry PC demand, as well as a track record of share gains,” he said. Microsoft “Particularly, we point to: Commercial M365’s healthy growth profile excluding Gen-AI, Improving PC outlook and the dwindling impact of the optimization narrative that took hold in CY23. … Further, we see a healthier backdrop giving way to broader revenue re-acceleration & earnings revision, which could support Microsoft’s current valuation. … We believe MSFT is one of the most compelling investment opportunities in the technology industry & across sectors.” Broadcom “In short, we expect strong double-digit revenue growth in the company’s AI-related businesses, a cyclical recovery in Broadcom’s classic Semiconductor business, and synergy capture following the acquisition of VMware, to drive operating margin expansion and earnings growth well in excess of the industry average. … We also envision the company’s attractive capital return profile serving as a tailwind to the stock’s relative performance.” Apple “2023 was a stock picker’s year within IT hardware and networking equipment with high levels of dispersion in the group. … AI & high quality compounders outperform. … Apple should also benefit from a recovery in industry PC demand, as well as a track record of share gains. … AAPL has outperformed the market YTD in 2023.” Fiverr “Looking long term, we see FVRR building operating momentum as a two-sided marketplace business with ample runway for growth on a normalized basis against a few key themes: 1) mgmt. executing against a large & growing TAM as the future of work evolves; 2) continuing to scale both the freelancer & buyer side of the marketplace; 3) product innovation as a driver of adoption, retention & share of wallet; & 4) geographic expansion.”
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