Every Big Tech stock built on its first quarter gains
Subscribers to Chart of the Week received this commentary on Sunday, July 2.
Back in March, with the second quarter approaching, we reassessed the stock market trends of the first quarter and took a few swings as to what could happen in the next three months. Some were spot on – Big Tech continued its blistering pace – while others –airline stocks falling flat -- were big whiffs. With the six month mark upon us, it’s time to reset market expectations again, once more with a tech lens, but this time with a highlight on a 2023 top pick that broke out of its shell.
On Friday, March 24, software stock MongoDB Inc (NASDAQ:MDB) traded at $212.96, sporting a modest year-to-date lead of 9.4%. It wasn’t the best-performing of our top picks, but it certainly wasn’t the worst—that would be retail stock Macy’s (M). What a difference three months makes, because MDB is now trading at $400.04, up 103% on the year.
MDB tacked on 2.9% in March and 22% in May, but the big breakout came on June 2, when the database firm posted a quarterly beat and raised its full-year revenue forecast. No fewer than nine (!) brokerages hiked their price targets in response, to a stock that back in January we identified as having room for bull notes due to MongoDB’s “type of technology and “pure-play” status as a stock tends to rise on upbeat economic news or Fed pivots.” Thanks to the massive 28% bull gap on June 2, MDB was in uncharted territory.
After three weeks of consolidating around $380, the shares are in the midst of a 3.3% weekly gain – its third straight weekly win -- completing the bull flag pattern on the charts and a new record high of $414.48. For context: MDB has had one losing week since April 14. So does that mean the stock is done for the year, and will spend the final six months of 2023 taking an overbought breather? Not necessarily, considering 5.5% of MDB’s total available float remains sold short, and short interest actually increased by 5.1% in the most recent reporting period. For context, the short interest/float percentage stood at 6.8% back in January, so there’s still plenty of room to squeeze the bearish bettors.
Below is a table of the rest of our 2023 Stock Picks, along with the table used back in March. AbbVie Inc (NYSE:ABBV) and Macy’s Inc (NYSE:M) have deepened their losses, but Aehr Test Systems (NASDAQ:AEHR), ASML Holding NV (NASDAQ:ASML), and Waste Management, Inc (NYSE:WM) are all enjoying solid if not spectacular years, the latter turning from red to green in the second quarter.
Big Tech, per the first table below, has proven that its first-quarter breakout was not an illusion, with every single stock nearly doubling its first-quarter year-to-date lead. This bodes particularly well for Microsoft Corp (NASDAQ:MSFT), which popped up on our list of second-half performers compiled by Senior Quantitative Analyst Rocky White. In the last 10 years, MSFT averages a 13.8% return, with 90% of the six-month stretches finishing in positive territory. And given Microsoft’s already-expanded ventures with Nvidia Corp (NASDAQ:NVDA) – one of the hottest stocks of the year with a 188% year-to-date gain -- the more closely entwined the two companies become, the better news for tech investors.
