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Driven by a boom in generative AI, the tech sector has led the pack this year, jumping 42% in the first half of 2023, while the companion ETF rose 40% in the first half of 2023. The sector faced a challenging environment in 2022 Central Fed hawks, which led to sharp declines. However, market participants have returned to the volatile sector as the Fed’s tightening cycle draws to a close.
When examining the space with the help of Alpha’s Quantitative Rating System search, the technology sector achieved an average healthy score of 3.34. The quantitative rating system assigns scores according to quantitative metrics, such as valuation, earnings growth, and recent inventory performance, with the highest score possible out of 5.
Digging deeper into the sector, six of the 75 companies are Strong Buys according to their quantitative ratings. 5 are rated Buy, with 62 stocks having a Neutral rating.
Chipmaker Broadcom (Nasdaq: AVGO) tops the group with a quantitative score of 4.95. The company’s score received a boost from higher profitability and momentum scores. She was downgraded by her rating score of D.
The chipmaker directed third-quarter earnings above consensus in its results for the second quarter. Broadcom shares are up nearly 62% this year, benefiting from the growing demand for semiconductors spurred by the artificial intelligence boom.
Salesforce business software provider (New York Stock Exchange: CRM) got the second place with a score of 4.93. Its profitability and momentum ratings were the main drivers, with its ratings score lagging behind.
Salesforce stock has jumped nearly 70% this year as the company has dealt with several activist investors and put out new AI offerings. On Wednesday, the company announced pricing for its generative AI technology.
Photoshop Adobe owner (Nasdaq: ADBE) with CRM, with a score of 4.93. Profitability and Momentum scores pushed its rating higher. With grade being the concern. Adobe stock has gained about 54% this year. The enterprise software maker raised its financial outlook after reporting better-than-expected results for the second quarter.
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