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Graham Rapier
2018-06-27T14:55:00Z
- RBC Capital Markets has published its "Imagine: 2025" portfolio of 75 stocks primed for the future.
- The bank says these tech stocks are best positioned to succeed on a longer timeline than normal stock picks.
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Most equity research is focused on the immediate term, usually a year.
Rarely do sell-side analysts concentrate on longer term prospects of companies.
RBC Capital Markets stepped to the plate, however, to compile its “Imagine 2025” portfolio, a list of 75 stocks set to dominate the next decade of innovation and growth.
The bank hopes its ideas "will challenge executives and asset managers to think expansively and creatively as as they invest with an eye towards the next decade."
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To compile the list, which RBC says was an "unprecedented collaboration" across its research department, Marc Harris, the firm’s head of global research, asked analysts to identify companies "they felt were positioning most boldly and effectively for the future."
We rounded up the tech stocks — spanning the divide from retailers like Amazon to enterprise services like Salesforce — that RBC says are set to own the future:
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Synopsys
Ticker: SNPS
Sector: Communications equipment & semiconductors
Year-to-date performance: +0.4%
Why it’s set to dominate the future: "The only player who benefits from AI spending despite the winner. While winners and losers may change in 7 years (difficult to predict) we know that EDA tools are needed to design the products."
Source: RBC Capital Markets
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Nvidia
Ticker: NVDA
Sector: Communications equipment & semiconductors
Year-to-date performance: +20.5%
Why it’s set to dominate the future: "Leader in AI and have not seen a strong competitor despite TPU concerns. Also, tied to secular growth vectors of gaming and auto, believe will be the winner for self driving vehicles."
Source: RBC Capital Markets
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Amazon
Ticker: AMZN
Sector: Internet
Year-to-date performance: +44.8%
Why it’s set to dominate the future: "Amazon, along with Google, have invested the most in AI competencies and have the Big Data access and Compute Power infrastructure to benefit the most from AI and ML deployments. AMZN also faces the most large TAMs among the Internet companies -- Retail, Cloud, Advertising, Shipping & Logistics, Business Supplies, etc.."
Source: RBC Capital Markets
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Alphabet
Ticker: GOOGL
Sector: Internet
Year-to-date performance: +6.4%
Why it’s set to dominate the future: "GOOGL, along with AMZN, has invested the most in AI competencies and has the Big Data access and Compute Power infrastructure to most benefit from AI and ML deployments. GOOGL also benefits from an extremely strong position in its core Advertising market and appears very well positioned against the Cloud and emerging Autonomous Vehicle opportunities."
Source: RBC Capital Markets
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Ticker: FB
Sector: Internet
Year-to-date performance:
Why it’s set to dominate the future: "We believe FB has made substantial progress in their AI and machine learning efforts, as it takes advantage of its scale and resources. The amount of user data FB can leverage -- and we point to its 2B+ users on FB platform alone, we think gives the company a unique advantage. FB leverages AI/ML in text analysis, ad targeting, demographic categorization, and newsfeed sorting, to name a few."
Source: RBC Capital Markets
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Netflix
Ticker: NFLX
Sector: Internet
Year-to-date performance: +103.8%
Why it’s set to dominate the future: "We view NFLX to be on par with most major Internet companies, in terms of its AI/ML development. Given its 120MM subscriber base, NFLX has the data and resources to leverage AI technology. Today NFLX uses AI technology for content promotion and targeting, content price optimization, programmatic marketing, and improving streaming quality, to name a few. One of the company's experiments include creating software-edited trailers that are personalized for each subscriber, increasing the likelihood of those viewers to watch the movie."
Source: RBC Capital Markets
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Micron Technology
Ticker: MU
Sector: IT hardware & semiconductors
Year-to-date performance: +25.6%
Why it’s set to dominate the future: "All roads in IMAGINE 2025 result in data creation. To the extent that transpires we see MU with their DRAM * NAND portfolio as well positioned."
Source: RBC Capital Markets
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Apple
Ticker: AAPL
Sector:IT hardware & semiconductors
Year-to-date performance: +8.2%
Why it’s set to dominate the future: "We see AAPL being well positioned to ramp up with their services offering, seeing a strong hardware cycle via AR/VR narrative and potential for them to win across multiple themes.
Source: RBC Capital Markets
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ServiceNow
Ticker: NOW
Sector: Software
Year-to-date performance: +31.2%
Why it’s set to dominate the future: "We think NOW is exposed to large and growing areas of spend in several next-gen areas including automation and machine learning. We also believe a lack of real competition and a highly profitable model sets NOW apart."
Source: RBC Capital Markets
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Splunk
Ticker: SPLK
Sector: Software
Year-to-date performance: +17.4%
Why it’s set to dominate the future: "We think SPLK is well positioned as a hybrid-cloud data management platform that can leverage massive data-sets and harness machine learning trends better than most. Along with growth that can remain at elevated levels, improving margins puts SPLK in a good position in our mind."
Source: RBC Capital Markets
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Microsoft
Ticker: MSFT
Sector: Software
Year-to-date performance: +15.8%
Why it’s set to dominate the future: "Leading hyperscale hybrid cloud platform with big runway of growth in AI, IoT, Gaming and other services."
Source: RBC Capital Markets
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Salesforce
Ticker: CRM
Sector: Software
Year-to-date performance: +30%
Why it’s set to dominate the future:"Leading provider of CRM software and becoming a platform for development, engagement and extensions into other process automation."
Source: RBC Capital Markets
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Visa
Ticker: V
Sector: Payments, processors, & IT services
Year-to-date performance: +16.0%
Why it’s set to dominate the future: "Identified and is at the center of new payment flows that represent more than $200T in volume, which is 4x the current addressable market. As new markets and technologies such as B2B, IoT, and Push Payments proliferate, all driven by many of the “change forces” facing society and technology, we believe V stand as beacons of “Trust” around the world, which will enable them to capture a disproportionate amount of share in these new payment flows."
Source: RBC Capital Markets
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Mastercard
Ticker: MA
Sector:Payments, processors, & IT services
Year-to-date performance: +29%
Why it’s set to dominate the future: "Identified and is at the center of new payment flows that represent more than $200T in volume, which is 4x the current addressable market. As new markets and technologies such as B2B, IoT, and Push Payments proliferate, all driven by many of the “change forces” facing society and technology, we believe MA stand as beacons of “Trust” around the world, which will enable them to capture a disproportionate amount of share in these new payment flows."
Source: RBC Capital Markets
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Paypal
Ticker: PYPL
Sector:Payments, processors, & IT services
Year-to-date performance: 11.7%
Why it’s set to dominate the future: "PayPal is a champion of democratized finance around the globe, while also capitalizing on the digitization of retail and financial services. PYPL brings scale and a unique two-sided model (relationships with both consumers and merchants), which allows them to control the entire consumer experience. We believe its growing platform of assets will open up the ~2B people around the world who lack financial services."
Source: RBC Capital Markets
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