Morgan Stanley recently said there are still plenty of large-cap tech stocks to buy ahead of earnings. The company said investors should buy on the weakness in stocks before companies like Nvidia and Apple report quarterly results. CNBC Pro scoured Morgan Stanley's research to find the stocks it likes as earnings season continues. Stocks include Dell, Nvidia, Keysight Technologies, Apple, and Fortinet. NVIDIA The company said it supports the AI chip maker's stock price ahead of its earnings report in late May. Analyst Joseph Moore sees a number of positive factors that could drive the stock higher in the coming months. “NVDA continues to see strong spending trends in AI, with demand from some new customers such as Tesla and various sovereigns revising upwards,” the company wrote. Moore said his own check results showed that demand for the company's graphics processing units, also known as GPUs, remains high. Nvidia's data center business is also running on all cylinders, he added. He continued: “We expect consensus and strong guidance for the April quarter, paving the way for a further set of positive EPS revisions.” The stock is up a hefty 77% since the beginning of the year, but the company said there is still plenty of upside. Electronic test equipment and software companies are also standouts, according to Keysight Technologies. “Within T&M [test & measurement] “Given its exposure across various layers of the network, including physical, protocol and application, we believe KEYS is best positioned to take full advantage of the AI/ML tailwinds,” said analyst Mehta Marshall. “Keysight is well-positioned to gain market share with its attractive and diverse portfolio.” To investors, she said: [the] “It has the broadest customer base across semi-, component, traditional networking, and hyperscalers, which, combined with its deep portfolio, should allow it to gain market share in the AI space,” she wrote. The company said, “There is still room for management.'' [overweight] “Keysight plans to report earnings in May because we believe today's valuations do not allow us to value the double-digit earnings growth story and defensive end market exposure,” Marshall said. “Fortinet is scheduled to report earnings on May 2nd, and Morgan Stanley is continuing.” Analyst Hamza Foderwala said he has become even more bullish on the company after attending a recent user conference, saying, “We see an upside to first-quarter estimates, and we are looking forward to second-half sales growth.'' We remain confident in our acceleration.” The company's findings show that demand is stable, and “conversations with partners indicate that overall demand is more stable after the disruption in the second half of 2023.” Foderwala said, adding that Fortinet has “regulatory tailwinds” and the need to secure critical infrastructure means reservations. “We are nearing a trough and poised to accelerate in the second half,” he said simply, noting that “AI server orders, backlog, pipeline and CSP/corporate expansion are strong.” [cloud service provider] The customer base shows that DELL's AI story is in its early stages and gaining momentum. …While guidance suggests margin pressure on a year-over-year basis, we believe the management revenue/EPS outlook is conservative. Our 2025 EPS exceeds his 3% guidance ceiling. Further momentum in the AI server story, its impact on PC growth, and its inclusion in the S&P 500 remain important catalysts going forward.” Apple: “Apple slightly beats March results.” “However, sales/expected EPS for the June fiscal year are expected to be 4-7% lower.” While the price of $165 seems priced in, it is difficult to set in today's volatile market. That said, the biggest WWDC in Apple's history will be held on June 10th, so any weakness after the earnings call should be a buy. Please remain OW. $210 PT. “Fortinet” is approaching a trough and is poised to accelerate in the second half of the year. …On net, we believe there is upside to our first quarter expectations and remain confident in second-half revenue acceleration. …Conversations with partners indicate that overall demand is more stable after the disruption in the second half of 2023. …Demand for Fortinet OT is growing as regulatory tailwinds for securing critical infrastructure grow [operational technology] Security (more than 10% of bookings) continues to be strong. ” Nvidia “NVDA continues its strong AI spending trend with upwardly revised demand from some new customers such as Tesla and various sovereigns. Strong guidance expected, setting the stage for another round of positive EPS revisions…NVIDIA should trade at a premium given the likely upside in the near term. We believe that exposure spans multiple layers of the network, including the physical layer, protocols, and applications… The company has a wide range of customers across semi, component, traditional networking, and hyperscalers. …combined with its deep portfolio, should make it a share gainer in the AI space…at today's valuation, we appreciate its double-digit revenue growth story and defensive end-market exposure. We believe that this is not possible, so we will continue to use OW KEYS. ”
