Goldman Sachs Says These Tech Stocks Have Never Been More Compelling

Goldman Sachs has identified several top tech picks as earnings season draws to a close. According to Credit Suisse, 90% of the S&P 500's market capitalization has reported results, with earnings surpassing estimates by 6.6% and 73% of companies exceeding projections.

‍

Goldman's research highlights Bumble, ZoomInfo, Shift4 Payments, SciPlay, and Fortinet as some of the firm's favored tech stocks following earnings announcements.

‍

Bumble:

Analyst Alexandra Steiger believes Bumble, the dating app company, has significant growth potential. Steiger notes Bumble's solid first-quarter report, highlighting revenue growth and expanding adjusted EBITDA margins. The company's focus on cost discipline, monetization, new product opportunities, and user safety contributes to its favorable outlook. Steiger remains optimistic about Bumble's growth prospects in 2023 and beyond. However, Bumble shares have declined by 24% this year.

‍

ZoomInfo:

Goldman expects a strong second half for ZoomInfo following its robust earnings report. Analyst Kash Rangan suggests that comparisons are easing and the company's guidance is now less risky. Despite macroeconomic turbulence impacting ZoomInfo, Rangan believes the company benefits from the artificial intelligence trend, providing competitive advantages. The firm also notes increasing sales productivity, indicating growing confidence in ZoomInfo's enterprise opportunity. Rangan emphasizes that investors are seeking evidence of a recovery in the second half of the year. ZoomInfo's shares have declined by nearly 32% year-to-date.

‍

Shift4 Payments:

While Shift4's shares have experienced a decline of over 9% this month, analyst Will Nance stands by the payment processing company. Nance acknowledges that investor expectations may have been too high, leading to disappointment despite the company's earnings beat. However, Nance praises Shift4's management and highlights the success of converting lower-end customers to its full platform. He finds the commentary regarding 50% of growth coming from conversions to be highly supportive, as it implies significant annual gateway conversions. Nance believes this growth can drive the stock's performance, noting that executing on the gateway conversion strategy could lead to significant outperformance over time. Shift4's shares are currently trading at around 11 times the estimated 2024 EBITDA.

‍