Friday, September 20, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including NVIDIA Corp. (NVDA), Netflix, Inc. (NFLX) and Applied Materials, Inc. (AMAT), as well as a micro-cap stock CSP Inc. (CSPI). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

NVIDIA’s shares have outperformed the Zacks Semiconductor - General industry over the year-to-date period (+138.1% vs. +96.7%). The company is benefiting from the strong growth of artificial intelligence (AI), high performance and accelerated computing. The data center end-market business is benefiting from the growing demand for generative AI and large language models using graphic processing units (GPUs) based on NVIDIA Hopper and Ampere architectures.

A surge in hyperscale demand and higher sell-ins to partners across the Gaming and ProViz end markets following the normalization of channel inventory are acting as tailwinds. Collaborations with Mercedes-Benz and Audi are likely to advance its presence in the autonomous vehicles and other automotive electronics space.

The Zacks analyst expects NVIDIA’s revenues to witness a CAGR of 46.4% through fiscal 2025-2027. However, softening IT spending amid macroeconomic headwinds and the US-China tech war remain major concerns.

(You can read the full research report on NVIDIA here >>>)

Shares of Netflix have outperformed the Zacks Broadcast Radio and Television industry over the year-to-date period (+44.5% vs. +24.5%). The company is benefiting from its growing subscriber base, thanks to a robust portfolio, paid subscription-sharing offering (part of its password-sharing crackdown), recent price changes and the strength of its business in general. 

Netflix added 8.05 million paid subscribers globally in second-quarter 2024, with a rise of 1% in average revenue per subscription. Netflix is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content. 

However, stiff competition in the streaming space from the likes of Apple, Amazon Prime Video and Disney+ is a headwind. NFLX’s leveraged balance sheet and a higher streaming obligation are concerns.

(You can read the full research report on Netflix here >>>)

Applied Materials’ shares have outperformed the Zacks Semiconductor Equipment - Wafer Fabrication industry over the year-to-date period (+19.2% vs. +11.7%). The company is benefiting from strength in the Applied Global Services segment, owing to the growing adoption of the 200-mm system. Solid momentum in the subscription and display businesses is a plus. 

Growing Semiconductor Systems revenues owing to rebound in the semiconductor industry is a major positive. The company’s strength in IoT, Communications, Auto, Power and Sensors (ICAPS) is likely to continue aiding its position in the semiconductor industry in the days ahead. Its broad-based diversified portfolio remains its key growth driver. 

However, softness in the Corporate & Other segment remains a concern. Weakening momentum across Taiwan and Europe is a major negative. Growing geo-political tensions between the United States and China are headwinds.

(You can read the full research report on Applied Materials here >>>)

Shares of CSP have outperformed the Zacks Computer - Integrated Systems industry over the year-to-date period (+31.1% vs. +27.1%). This microcap company with market capitalization of $121.85 million have seen growth driven by its services segment, with a 10% increase in service revenues in third-quarter fiscal 2024, improving the gross margin by 150 basis points to 35%. 

The AZT PROTECT product line offers strong growth potential, with expanding reseller partnerships and integration with companies like Forescout, Ebix and Rockwell. A robust cash position of $28.9 million enhances strategic flexibility. Recurring revenue models, including managed services and UCaaS, support cash flow stability, with UCaaS revenues doubling in fiscal 2024. 

CSPI’s Technology Solutions division remains resilient, with long-term revenue visibility from IT infrastructure projects. The company's strategic expansion into mid-tier markets, and growing presence in cloud, AI and cybersecurity sectors positions it for growth.

(You can read the full research report on CSP here >>>)

Other noteworthy reports we are featuring today include Arista Networks, Inc. (ANET), Parker-Hannifin Corp. (PH) and TransDigm Group Inc. (TDG).

Mark Vickery
Senior Editor

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>