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Bank of America named a slew of tech stocks that are just too attractive to ignore. The bank said these companies have major upside heading into the months ahead. CNBC Pro combed through Bank of America’s research to find the firm’s favorite top tech plays. They include: Fiverr, IBM, Meta , On Semiconductor and Concentrix. IBM The evolution of IBM continues, Bank of America analyst Wamsi Mohan said after attending the company’s recent Think event. The firm believes IBM is well on its way to being a major player in the field of artificial intelligence. “IBM expect to monetize AI first through Services and expects a later inflection in Software as adoption scales,” he wrote. Mohan said AI could automate 30% of the company’s backroom jobs over time. In addition, IBM has a strong balance sheet, stable margins and Mohan praised management noting they continue to pull all the right levers. “We believe IBM will embark on further cost cutting, and enhance its services and software offerings through acquisitions,” he said. The stock finished the week up 3.6% this year, and Bank of America sees plenty more gains for the legacy tech giant. “We maintain Buy on IBM given the defensive nature of the business in a slowing Macro and attractive dividend yield that should limit downside,” Mohan said. Fiverr Most Wall Street analysts continue to ponder whether the freelance services marketplace is a beneficiary of AI. Analyst Nat Schindler said he thinks it is and that investors should take advantage of the buying opportunity. The company recently reported better-than-expected earnings. On top of that, early indications point toward Fiverr being well positioned to take on artificial intelligence, Schindler said. “On the earnings call, management commented that they have seen only positive impact from AI so far,” he noted. A recession remains a risk for the company, Schindler says, however he’s “encouraged by early traction on AI.” “We view Fiverr’s long-term opportunity positively and believe consistent cohort behavior and improving marketing efficiencies can help Fiverr to drive consistent revenue flows and operating leverage,” he added. With the stock down just 4.4% this year, Schindler sees tremendous upside. The firm has a price target of $44 per share. “Fiverr has a unique marketplace for business services and we believe the change toward permanent remote work will likely increase the long-term demand for supply of freelancers,” he wrote. Concentrix The selloff in shares of the customer solutions technology provider is overdone, analyst Ruplu Bhattacharya said earlier this week. In a note following a meeting with company management, Bhattacharya said he’s feeling more upbeat about the stock. “As we expected, investor questions focused on AI’s impact on revenues and margins, consolidation in the industry, and pricing,” he wrote. The firm said automation has been healthy for margins and expects that to continue. Bhattacharya also sees ChatGPT as “another tool in [Concentrix] arsenal which is helping the company win new clients and new revenue streams,” he said. Meanwhile, as the pandemic moves further in the rear view mirror, the firm says it sees further share gains and above average revenue growth for Concentrix. “We see the pullback in shares as an overreaction and reiterate our Buy rating. on global scale, breadth of offerings, above market rev growth, and brand name,” Bhattacharya said. Shares are down almost 32% this year. IBM “IBM expect to monetize AI first through Services and expects a later inflection in Software as adoption scales. We maintain Buy on IBM given the defensive nature of the business in a slowing Macro & attractive dividend yield that should limit downside. … We view IBM as a defensive investment given its high exposure to recurring sales, cost cutting levers, solid balance sheet, potential share gains, & relatively stable margins. We believe IBM will embark on further cost cutting & enhance its services and software offerings through acquisitions.” Meta “Increasing AI could lead to multiple expansion. … Also, new AI tools could help with revenues, our recent channel checks have highlighted that company’s Advantage+ products are helping advertisers reduce back-end costs related to ad creation and format optimization which could be put back towards advertising, aiding Meta’s growth.” On Semiconductor “While AI is the buzzword du jour, let’s not forget the other big (bigger?) tech inflection – the transition of the $3 Trillion ICE (internal Combustion) age to that of Automated, Connected and Electrified (ACE) cars with 2x the chip content and still in their infancy ( < 12% penetration). … We see ON as a top-3 global/top US vendor of smart power and sensing chips for EVs, charging/storage infra, autonomous vehicles and factory automation.” Concentrix “As we expected, investor questions focused on 1) AI’s impact on revenues and margins, 2) consolidation in the industry, and 3) pricing. We liked that automation is helping to improve CNXC’s margins & mgmt. sees ChatGPT/LLMs as another tool in its arsenal which is helping the company win new clients and new revenue streams. … We see the pullback in shares as an overreaction & reiterate our Buy rating. on global scale, breadth of offerings, above market rev growth, and brand name.” Fiverr “On the earnings call, management commented that they have seen only positive impact from AI so far. … Although near-term risk is a business slowdown, we don’t think it reflects on the long-term scale of the opportunity. We are encouraged by early traction on AI. Fiverr has a unique marketplace for business services and we believe the change toward permanent remote work will likely increase the long-term demand for supply of freelancers.”
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