The overall stock market remains quiet, with the Dow Jones Industrial Average trading near levels hit back in early November after a strong and exciting rally in October. With that, large caps have returned to the trading range that’s dominated since the Dow Jones first charged toward the 18,000 level last December.
But beneath the surface, a lot has been going on — especially among tech stocks.
The apparent stability belies growing signs of weakness. Small-cap stocks haven’t been participating. Commodities and high-yield bonds are weak. And a growing number of NYSE stocks have been rolling over since early November as the bulls rely on fewer and fewer stocks to hold the major market averages aloft.
That’s worrisome, but not necessarily a recipe for a new downtrend. If the bulls are going to push the Dow Jones over the 18,000 level toward new highs, the focus seems to be on a group of big, well-known tech stocks that are already extended but look ready for surge to fresh highs.
Here are seven to watch.
Tech Stocks on the Move: Netflix, Inc. (NFLX)
Shares of online streaming contend provider Netflix (NFLX) have pushed to new highs on Wednesday as the tailwinds of exclusive content, rising subscriber rolls and the growing incidence of cord cutting drive excitement in the stock.
RBC Capital Markets analysts in late November noted that their latest survey of more than 1,000 Internet users found a record high 51% use Netflix vs. 48% for YouTube and 26% for Amazon (AMZN). User satisfaction rates are also very high, and very few indicated a price hike would lead them to cancel.
Tech Stocks to Watch: Facebook Inc (FB)
Facebook (FB) shares are drifting back toward their recent highs as chatter has focused on founder Mark Zuckerberg’s decision to donate the majority of his stock holdings to charity following the birth of his daughter.
Analysts at Rosenblatt think current Street consensus expectations for Facebook — including a 38% total revenue growth assumption — are still reasonable for the coming year. They believe the company’s mobile ad technology is stall at an early stage despite its already dominant position.
Futures catalysts include an increase in video and Instagram ads.
Tech Stocks to Watch: Amazon.com, Inc. (AMZN)
Amazon (AMZN) has enjoyed a lift as Black Friday shopping results revealed a shift away from brick-and-mortar stores towards online shopping. Buzz has also been building over newly released details of the company’s drone delivery efforts (dubbed “Prime Air”).
Analysts at Barclays recently increased their price target from $700 to $850 in response.
Tech Stocks to Watch: Alphabet Inc (GOOG, GOOGL)
Alphabet Inc (GOOG, GOOGL) shares are rising to fresh highs thanks to an analyst upgrade on Tuesday from RBC Capital Markets. They are looking at a $880 price target thanks to solid profitability and a new company segment accounting that will provide greater cost transparency and, thus, lift sum-of-the-parts valuation efforts.
Long-term, they believe there is potential for the share price to push past the $1,000 level.
Tech Stocks to Watch: Microsoft Corporation (MSFT)
Microsoft Corporation (MSFT) shares punched up and out of a three-month trading range on Wednesday despite relatively tepid PC demand response from the release of its new Windows 10 operating system.
Instead, investors are focusing on the company’s efforts to reinvent itself into a cloud-focused and software-as-a-service provider more in tune with today’s marketplace. As a result, analysts at Raymond James recently upgraded shares to a “strong buy.”
Tech Stocks to Watch: Intel Corporation (INTC)
Intel (INTC) shares tested above the $35 level on Wednesday, putting the late 2014 highs near $37 in play, as the catalyst changes from revitalized PC demand (didn’t happen) to new profit opportunities in the data center segment as more and more computing tasks are uploaded to the cloud.
Back-end processing will grow increasingly important amid the rise of the Internet of Things as well. UBS analysts believes the company can grow data center sales consistently at a 15% annualized growth rate.
Tech Stocks to Watch: Apple Inc. (AAPL)
Apple (AAPL) shares are the laggards in this group, still trading below their 200-day moving average on worries about the Apple Watch, iPhone demand, and sales in China.
But, for the Apple Watch at least, a turnaround could be upon us. FBR Capital analysts noted that Black Friday channel checks revealed growing interest in the wearable heading into the holiday season. Overall sales have totaled around 6 million since launch; they believe sales for the December quarter alone could total between 5 and 6 million.