Bank of America has named a slew of tech stocks that are too attractive to ignore. The bank said these companies have a significant upside in the coming months. CNBC Pro dug into Bank of America research to find the company’s favorite top tech plays. They include: Fiverr, IBM, Meta, On Semiconductor, and Concentrix. IBM’s evolution continues, Bank of America analyst Wamsey Mohan said, after attending the company’s latest Think event. The company believes that IBM is on its way to becoming a major player in the field of artificial intelligence. “IBM expects to monetize AI first through services and expects a turn later in software as adoption metrics,” he wrote. Mohan said that AI can automate 30% of a company’s backroom jobs over time. In addition, IBM has a strong balance sheet, stable profit margins and Mohan praised management noting that it continues to pull all the right levers. “We believe IBM will proceed to further reduce costs, and enhance its services and software offerings through acquisitions,” he said. The stock ended the week up 3.6% this year, and Bank of America sees more gains for the longtime tech giant. Mohan said: “We maintain buying into IBM given the defensive nature of the business in light of a significant slowdown in the dividend yield and that would limit the decline.” Fiverr Most Wall Street analysts continue to ponder whether the freelance services market is the beneficiary of AI. Analyst Nat Schindler said he believes it is and that investors should take advantage of the buying opportunity. The company recently reported better-than-expected earnings. Moreover, initial indications are that Fiverr is well positioned to take on AI, Schindler said. “On the earnings call, management commented that it has only seen a positive impact from AI so far,” he noted. Recession remains a risk for the company, Schindler says, but he was “encouraged by the early attraction to AI.” “We view Fiverr’s long-term opportunity positively and believe that consistent team behavior and improved marketing efficiencies can help Fiverr increase steady revenue streams and operating leverage,” he added. With the stock down just 4.4% this year, Schindler sees a huge upside. The company has a price target of $44 per share. “Fiverr has a unique market for business services, and we believe the change towards permanent, remote work is likely to increase long-term demand for the supply of freelancers,” he wrote. Concentrix analyst Ruplu Bhattacharya said earlier this week that shares of the technology client solutions provider were oversold. In a note following a meeting with the company’s management, Bhattacharya said he was feeling more bullish on the shares. “As we expected, investor questions focused on the impact of AI on revenue and margins, industry consolidation, and pricing,” he wrote. The company said automation has been good for margins and expects that to continue. Bhattacharya also sees ChatGPT as “another tool in [Concentrix] The arsenal that helps the company win new customers and new revenue streams.” The decline in equity was an overreaction and iteration of our Buy rating. On a global scale, breadth of offering, higher market growth rate growth, and brand name,” Bhattacharya said. Shares are down about 32% this year. IBM expects to “invest in AI first through services and expects a later reflection in software as adoption metrics.” We maintain buying from IBM due to the defensive nature of the business with a slowing and attractive overall dividend yield which should limit the downsides. … We view IBM as a defensive investment due to its significant exposure to repeat sales, cost-cutting leverage, strong balance sheet, potential equity gains, and relatively stable margins. We believe IBM will proceed to further reduce costs and enhance its services and software offerings through acquisitions. “Meta” artificial intelligence increase can lead to multiple expansion. … Also, new AI tools can help drive revenue, and our recent in-channel validations have highlighted that the Company’s Advantage+ products help advertisers reduce back-end costs related to creating ads and improving curation that can be traced back to advertising, helping to Meta growth. “On Semiconductors” While AI is the buzzword of the era, let’s not forget the other big (biggest?) technology reversal – the transition from the $3 trillion era of internal combustion to the era of Automated, Connected, and Electric Vehicles (ACE) with twice as much content The chip is still in its infancy (penetration rate is less than 12%). … We regard ON as a global top 3/largest US seller of smart power and sensor chips for electric vehicles, charging/storage infrastructure, autonomous vehicles and factory automation. “Concentrix” As we expected, investor questions focused on 1) artificial intelligence impact on revenue and margins, 2) industry consolidation, and 3) pricing. We liked that automation is helping improve margins for CNXC & mgmt. It sees ChatGPT/LLMs as another tool in its arsenal that helps the company win new customers and new revenue streams. … We view the stock decline as an overreaction and reiterate the Buy rating. On a global scale, breadth of offerings, growth rate higher market growth, brand name. Fiverr On the earnings call, management commented that it has seen only a positive impact from AI so far. … Although the near-term risk is a slowdown in business, we don’t think it’s reflected in the long-term scope of the opportunity. We were encouraged by the early attraction to AI. Fiverr has a unique market for business services and we believe the change towards permanent, remote working is likely to increase long-term demand for the supply of freelancers.”
BofA says these five tech stocks are set to debut
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