Bernstein names its top tech stock picks for 2024, including this popular chipmaker
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Bernstein analysts named a slew of tech stocks as its best ideas in 2024. These companies are firing on all cylinders and have more room to run, the analysts said. CNBC Pro combed through Bernstein research to find the firm’s favorite tech stocks in 2024. They include: Broadcom , Uber, PDD , Taiwan Semiconductor and Grab . Grab Shares of the the Southeast Asia ride-hailing and delivery food company have lagged some peers in the United States, but that’s not stopping analyst Venugopal Garre from naming the stock as a top tech pick heading into next year. The firm said it sees an “attractive risk reward with continuous profitability improvement.” In a slide presentation to clients, Garre listed several catalysts ahead including a pick-up in ride hailing momentum and a bottom in food delivery. On-demand services are gaining share, too, he wrote, while Grab has “reached industry leading reported margins in Food/Ride,” the firm added. Grab is also poised to be a player in M & A activity as food delivery players consolidate in some Asian countries, according to Garre. “Overall, we believe that the risk-reward profile for Grab is favorable,” he concluded. Broadcom “This is a phenomenal business,” analyst Stacy Rasgon said of the semiconductor company. Now, its business is about to get even better with the completion of its VMWare acquisition, the firm said. “Broadcom’s stock has historically shown strong returns post-deal close as accretion flows in,” he said. In addition, Rasgon noted, Broadcom is one of the “few ‘real’ AI stories in the space.” AI represents about 25% of the company’s semiconductor revenue, according to Bernstein. Meanwhile, the stock is relatively inexpensive despite shares being up 88% this year. “AVGO’s valuation remains attractive, sitting at a sharp discount to the sector despite the run the stock has had this year,” he wrote. Uber “From cash burn to cash build – UBER is now a real company,” analyst Nikhil Devnani said of the ride-hailing giant. The firm said Uber is “still a growth business” with further ability to take share in delivery and ride-sharing. “Delivery is proving to be sticky … and is increasingly profitable – people like convenience,” he wrote. The firm said management is executing and the advent of new products is paying off. Devnani also likes the opportunity for free-cash flow growth, which he calls “compelling.” “UBER has the capacity to return significant amounts of capital over time given organic cash build and monetizable assets,” he added. The stock is up 150% this year with more room to run, according to the firm. “The core business is hitting its stride, with scale and cross-sell benefits driving market share gains,” he said. PDD “PDD continues to gain share within the domestic e-commerce market – we think the recent gains go beyond poor macro and consumers down trading. … PDD has won close to a 40% share of incremental industry [gross merchandise value] in the past year; we’re optimistic this can continue. … PDD continues to outperform in China e-commerce. … We think PDD’s take rate has room to go higher.” Taiwan Semiconductor “We Believe TSMC Will Remain Ahead of Intel and Will Be Producing Some Compute Tiles From Intel. …. We project this adds 1-3% of incremental revenue to TSMC in late 2024 and more in 2025, and helps make Intel contribute ~10% of TSMC’s total revenue. … We reiterate Outperform and choose TSMC as our Best Idea for 2024.” Uber “From cash burn to cash build – UBER is now a real company … still a growth business. … The core business is hitting its stride, with scale & cross-sell benefits driving market share gains. … Delivery is proving to be sticky … & is increasingly profitable – people like convenience!. … Compelling FCF growth at a reasonable price. … UBER has the capacity to return significant amounts of capital over time given organic cash build & monetizable assets.” Broadcom “Combines a phenomenal core narrative with one of the few truly meaningful AI stories in the space. … First things first – this is a phenomenal business … Broadcom’s stock has historically shown strong returns post-deal close as accretion flows in. … AVGO’s valuation remains attractive, sitting at a sharp discount to the sector despite the run the stock has had this year.” Grab “Attractive risk reward with continuous profitability improvement. … Grab has reached industry leading reported margins in Food/Ride. … Grab is also considering purchase of Foodpanda asset. If Grab acquires it and gets regulatory approval, it will be a key catalyst if the acquisition price is considered good. … Overall, we believe hat the risk-reward profile for Grab is favorable.”
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