Alphabet stock (NASDAQ: GOOGL)
Analyst Stephen Ju increased his earnings estimates for the outperform-rated stock and raised his price target to the highest level on Wall Street in a note to clients on Friday, stating that growth in Google’s advertising business will continue even after the sector recovers from the pandemic.
“Given Google’s global reach, it is worth noting that nearly all advertising sectors are on track to outperform our expectations for 2Q21. And, while overall ad budget recovery drove recent results, we shift our attention to the more important product-driven contributors to ad volume/pricing growth in 2H21 and beyond,” the note stated.
Credit Suisse raised its price target on Alphabet from $2,755 to $3,350 per share. According to FactSet, that target is the highest among major analysts and is 30% higher than the stock’s closing price on Thursday.
According to FactSet, the average price target among Wall Street analysts is around $2,824 per share. This year, Alphabet’s stock has risen by more than 46 percent.
According to Credit Suisse, one Google innovation that will help its ad business is a way for physical retail stores to show their real-time inventory.
“Google is now following up with the ability to scan in-store products more easily, which will then appear automatically in the Business Profile section of Search and Maps. Users now have access to real-time inventory information thanks to the simplified offline catalog ingestion, which should help drive conversion and thus incremental ad dollars over time,” according to the note.
Apple stock (NASDAQ: AAPL)
According to Credit Suisse, the total addressable market for Apple hardware will reach $300 billion by 2023, led by the iPhone.
In a July 14 note, the bank predicted that iPhone sales would be 234 million this year, 237 million in 2022, and 249 million in 2023.
According to Credit Suisse, Apple’s new iPhones will likely include “evolutionary” upgrades over 2020’s iPhone 12, such as an improved camera, display, and processor.
Analysts at the bank anticipate more “incremental” changes from Apple over the next one to two years, such as the removal of the camera notch, a fingerprint reader beneath the screen, and foldable displays.
“We have seen good momentum in the iPhone 12 cycle with a richer mix as well as unit growth off a lower base,” the bank said in a research note released on Wednesday. Apple is expected to release the iPhone 12 successor sometime this fall.
Credit Suisse stated that it is still “bullish” on next-generation 5G networks as a catalyst for iPhone upgrades in the long run.
Here are some of the stocks that Credit Suisse believes will benefit the most as the iPhone evolves:
Samsung, a company based in South Korea that manufactures phone displays.
Inari Amertron Berhad is a Malaysian company that manufactures radio frequency systems for smartphones.
Lens Tech is a Chinese company that makes iPhone cases.
Micron is a company based in the United States that manufactures computer memory and data storage.
BOE Technology Group is a Chinese phone display supplier.
Largan, a Taiwanese manufacturer of camera lenses.
LG Innotek is a South Korean manufacturer of electronic components.
Chroma is a Taiwanese company that provides components for Apple’s Face ID.
STMicroelectronics, a chipmaker based in Switzerland.
Chipbond, a Taiwanese iPhone panel supplier.
Sony, a Japanese company that manufactures camera sensors.
Broadcom is a chipmaker based in the United States.
Credit Suisse cited a variety of reasons for its stock selections.
With regard to Samsung, the bank stated that the South Korean conglomerate could benefit from Apple’s development of foldable smartphones.
Credit Suisse predicted that larger memory in the new iPhones would benefit Micron.
According to Credit Suisse, STMicroelectronics is the only European semiconductor company with “material Apple and iPhone exposure,” and Apple has grown from a 10% customer in 2016 to a 24% customer in 2020.
Credit Suisse stated that Sony “will continue to benefit from camera spec upgrade in iPhone.”
Meanwhile, Broadcom will expand its radio frequency components business as iPhone users transition to 5G devices, according to Credit Suisse.