Tech Stocks Buck Trend: Switches, Routers, Storage, Integrated Circuit Makers On Watch

Some technology leaders are casting a bright light, defying a bleak sector outlook. Some of these tech stocks are in the IBD 50, giving the growth index an emerging slice of leadership. 




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On Wednesday, Micron Technology (MU) warned of a slowdown in its capital expenditure plans and wafer starts for NAND and DRAM chips. It was one of a number of cautious statements from the sector. Nonetheless, there are some tech leaders bucking the cyclical downtrend. 

Super Micro Computer (SMCI) has been climbing steadily after breaking out of a cup base with a buy point of 75.03 after its Nov. 1 earnings report. Shares are extended above their buy point and are holding solidly above their 50- and 200-day moving averages.

The San Jose, Calif.-based company has perfect Composite and Relative Strength Ratings of 99. Sales of the tech stock grew a whopping 79% in the September-ended quarter to $1.85 billion, while earnings of $3.42 a share showed 490% growth. Super Micro makes storage, chassis and other hardware products for enterprise, cloud and other industries.

Pure Storage (PSTG) broke out of a cup-with-handle base with a buy point of 32.07. But the stock is trading below that entry. Its Composite Rating of 92 is sufficiently strong while its Relative Strength Rating of 89 lags but is still significant.

Its July-quarter sales of $646.8 million grew 30% while earnings of 32 cents rose 129%. Pure Storage makes flash-based storage systems.

Lattice, Allegro Also Show Strong Growth

Lattice Semiconductor (LSCC) rebounded from its 50-day moving average in early November, rising above resistance levels from April and August. The tech stock’s Composite Rating of 94 and Relative Strength Rating of 88 reflect the price action.

The Hillsboro, Ore.-based company grew revenue by 31% to $172 million with earnings of 48 cents a share that showed a growth of 71%. The company specializes in programmable integrated circuits that are used in 5G, system security, automation, robotics and artificial intelligence applications.

Allegro Microsystems (ALGM) rebounded from its 50-day line in October and has been trending higher since. In the past week, it climbed to the highest level since January.

Sales of $237.7 million in the September quarter grew 23%, while earnings of 31 cents a share were up 55% from the previous year. The company makes sensors and other equipment used in self-driving cars, factory automation, domestic appliances and other industries.

In September, Allegro acquired Heyday Integrated Circuits, which makes power systems that are used in EVs and solar inverters.


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Tech Stock On Both IBD 50 And IBD Leaderboard

Arista Networks (ANET) is in consolidation with a buy point of 148.67. An alternate entry is at 132.97. The stock has a perfect Composite Rating of 99 and a Relative Strength Rating of 87.

Sales of $1.17 billion grew 57%, while earnings of $1.25 climbed 69% in the third quarter. Arista makes network switches and routers for data centers and cloud systems. ANET is also an IBD Leaderboard stock.

On Semiconductor (ON) tried to clear a buy point of 76.88 but has backtracked. The tech stock has a relative strength line at a fresh high. Sales of $2.19 billion in Q3 grew 26%, while earnings of $1.45 a share rose 67%. ON ‘s amplifiers, signal controllers, converters, potentiometers and other products are used in factory automation, medical imaging, construction, energy and other industries.

Follow VRamakrishnan @IBD_VRamakrishnan for more news on tech stocks.