2 tech stocks to consider after impressive first quarter results – May 8, 2024

Mostly attributed to the Magnificent Seven, technology stocks powered the first quarter earnings season, with total S&P 500 profits now expected to be up 5% from the prior period.

While many of the tech stocks in this week’s earnings list may not be household names, many of them stand out after impressively beating their bottom line expectations.

Better yet, two of these tech stocks made the coveted Zacks Rank #1 (Strong Buy) list and now seems like a great time to invest following their impressive Q1 results on Tuesday, May 7.

Arista Networks A NET

Performance since the start of the year: +24%

Cloud networking solutions provider Arista Networks should be on investors’ radar after reporting first-quarter earnings of $1.99 per share, which undercut the Zacks Consensus Estimate of $1.74 per share by 14%. Better yet, first-quarter earnings increased 39% from $1.43 per share in the comparative quarter. Even more impressive, Arista Networks has continued a very long string of better-than-expected earnings in every quarter since the company went public in 2014.

First-quarter sales of $1.57 billion beat estimates by 1% and jumped 16% from $1.35 billion a year ago. Additionally, Arista Networks appears to be a viable AI investment option. At this point, Arista Networks is looking to establish itself as a pure and simple networking innovator for the next era, to address what CEO Jayshree Ullal has highlighted as a $60 billion market in networking. Data-driven client-cloud AI.

Turtle Beach HEAR

Performance since the start of the year: +41%

Turtle Beach stands out as an audio technology company that provides premium headsets and directed audio solutions with applications used in digital storage, kiosks, consumer electronics and healthcare.

With its shares soaring this year, Turtle Beach reported a surprise profit of $0.21 per share in the first quarter, compared to an adjusted loss of -$0.27 per share in the year-ago quarter and exploded estimates that called for a loss of -$0.16 per share. First-quarter sales increased 8% year-over-year to $55.85 million and beat estimates of $53.18 million by 5%.

Reassuringly, Turtle Beach’s annual profit is now forecast at $0.90 per share for fiscal 2024, compared to an adjusted loss of -$1.03 per share last year. Additionally, FY25 EPS is expected to increase another 51% to $1.35. Given that Turtle Beach stock is trading at $15 with a reasonable P/E multiple of 16.4X, the risk reward still looks favorable.

Take away

Notably, Arista Networks and Turtle Beach belong to the Zacks Top-Rated Communications Components industry, which is currently in the top 13% of over 250 Zacks industries. Benefiting from their strong business environment now is a good time to buy these tech stocks as earnings estimate revisions are expected to trend upward after crushing Q1 EPS estimates.

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