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Biggest Nasdaq winners and losers in 2017: Chip makers, videogame publishers lead tech

A preference for growth stocks propelled the Nasdaq ahead of the S&P 500 and Dow for the year

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By Emily Bary


Reuters

It has been a banner year for U.S. stocks, and particularly tech stocks, as investors rushed into growth-oriented names. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +2.91%  finished 2017 with a 28.2% gain, outpacing the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.36% and S&P 500 index /zigman2/quotes/210599714/realtime SPX +2.60% , which ended the year up 25.1% and 19.4% respectively.

It was a year of records as well, with the Nasdaq hitting two 1,000-point milestones during the year, passing 6,000 in April and briefly crossing 7,000 earlier this month, before falling back a bit. It was the third quickest 1,000-point climb in the index’s history.

Some of the Nasdaq’s biggest winners in 2017 include names you probably haven’t heard of, such as Gravity Co. Ltd. /zigman2/quotes/203369605/composite GRVY +3.20% , a South Korean videogame maker. Its shares rose 796% on the year, following a number of game launches in key markets.

The cryptocurrency craze boosted other top performers, such as Riot Blockchain Inc. /zigman2/quotes/209538617/composite RIOT +4.59% , formerly an “animal health care” company known as Bioptix. Riot saw its stock jump after announcing that it was becoming a blockchain business. Shares gained 640% for the year.

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For those who didn’t correctly predict that pivot, plenty of conventional names delivered handsome returns as well. For the remainder of the story, we focus on the smaller Nasdaq-100 Index /zigman2/quotes/210598364/realtime NDX +2.75% , which saw Align Technology Inc. /zigman2/quotes/200300692/composite ALGN +5.58%  as its biggest gainer. The company makes Invisalign braces and other orthodontic products; its shares rose 131% on the year.

Here are the other big winners:

Stock Year-to-date change
Align Technology Inc. 131%
Take-Two Interactive Software Inc. 123%
Vertex Pharmaceuticals Inc. 103%
MercadoLibre Inc. 102%
Wynn Resorts Ltd. 95%
Micron Technology Inc. 88%
PayPal Holdings Inc. 87%
Nvidia Corp. 82%
Activision Blizzard Inc. 75%
Lam Research Corp. 74%

Take-Two Interactive Software Inc. /zigman2/quotes/204008930/composite TTWO +2.73% , the smallest of the major videogame publishers in the U.S., posted the largest gains of the three for 2017. The company used to regularly lose money in years when it did not release a new version of blockbuster title Grand Theft Auto, but it has found a more stable business model in recent quarters. Take-Two continues to benefit from an industry shift toward more in-game purchases, which allow publishers to generate revenue on older titles that gamers already own. Take-Two was the second biggest gainer in the Nasdaq-100, with shares up 123%. Fellow publisher Activision Blizzard Inc. /zigman2/quotes/200717283/composite ATVI +0.85% was another top performer, with its stock rising 75%.

Videogame stocks in 2018: Trends seem good for publishers, bad for retailers

Micron Technology Inc. /zigman2/quotes/205710729/composite MU +4.20%   also had a good year, benefiting from a perfect storm of high demand and low supply for both NAND and DRAM memory chips. The development of internet infrastructure, such as server computers, boosted demand for flash memory chips. Micron earned just 6 cents a share on an adjusted basis for its fiscal year that ended in August 2016, but earnings per share rose to $4.96 for the latest fiscal year. Analysts tracked by FactSet predict that the company can nearly double earnings, to $9.43 a share, in the current fiscal year. Micron was the Nasdaq-100’s sixth biggest gainer, with its stock rising 88%.

Micron CEO: Red-hot memory market should maintain demand that has elevated earnings

Continued growth in e-commerce spending buoyed shares of PayPal Holdings Inc. /zigman2/quotes/208054269/composite PYPL +5.98%   up 87%, and the company also reaped the rewards of some smart strategic moves. After spinning out of eBay Inc. /zigman2/quotes/204653455/composite EBAY +3.29%  in 2015, PayPal realized it had to start working with Visa Inc. /zigman2/quotes/203660239/composite V +1.83% and Mastercard Inc. /zigman2/quotes/207581792/composite MA +3.76% , instead of against them. In the past year, PayPal has made it easier for customers to sign up for accounts and fund transactions with their preferred methods of payment. PayPal, the index’s seventh best performer, is now adding new active accounts at a faster pace than before, and its earnings are projected to rise 25% this year. Next up, investors will find out whether the company can effectively monetize users of Venmo, its popular peer-to-peer payment platform.

Five Questions: PayPal exec Bill Ready sees big opportunity in Pay with Venmo

Nvidia Corp. /zigman2/quotes/200467500/composite NVDA +4.80% , which was the biggest gainer in 2016, saw its shares rocket another 82% in 2017, after its chips for gaming rigs proved useful for other purposes, including machine learning. More GPUs are being sold for the same servers whose proliferation is helping Micron, as well. Nvidia has also benefited from the cryptocurrency boom, as soaring prices for cryptocurrencies have driven up demand for GPUs that help with mining. Whether that dynamic persists in 2018 remains to be seen, with some analysts predicting that GPUs will become less important for crypto mining going forward. Adjusted earnings are projected to rise 66%, to $4.04 a share for the fiscal year ending in January.

Just 14 members of the index saw their stocks fall in 2017, and most of them weren’t traditional tech companies. Those losers include O’Reilly Automotive Inc. /zigman2/quotes/207206119/composite ORLY +1.40% , Walgreens Boots Alliance Inc. /zigman2/quotes/203410933/composite WBA +2.28% , Ulta Beauty Inc. /zigman2/quotes/210513442/composite ULTA +0.13% , and Kraft Heinz Co. /zigman2/quotes/203625533/composite KHC +1.24%  

Here’s a look at some of the Nasdaq-100’s worst tech performers.

Dish Network Corp. -18%
O’Reilly Automotive Inc. -14%
Ulta Beauty Inc. -12%
Walgreens Boots Alliance Inc. -12%
Kraft Heinz Co. -11%
Celgene Corp.   -10%
Shire PLC ADR   -9%
Liberty Global PLC LILAC Group class A /zigman2/quotes/204391268/composite LILA   -8%
Henry Schein Inc. /zigman2/quotes/208390163/composite HSIC   -8%
Liberty Global PLC LILAC Group class C   -6%
Incyte Corp. /zigman2/quotes/204510994/composite INCY   -6%

Dish Network Corp. /zigman2/quotes/207505872/composite DISH +3.31% is considered a potential acquisition target— it owns valuable spectrum—but no suitors have emerged so far. Shares of Dish popped a bit after the Sprint Corp. /zigman2/quotes/208685669/composite S +5.59%  / T-Mobile US. Inc. /zigman2/quotes/204659678/composite TMUS +1.99%  deal was called off, since Dish has been floated as a possible partner for T-Mobile, but the stock has since given back its gains. Meanwhile, the company is exposed to the cord-cutting trend, which has some investors nervous. Dish lost some 400,000 net subscribers in its latest quarter (versus a year earlier), though about 145,000 of those were customers who had their services “proactively paused” due to Hurricane Maria.

In a year when other chip makers have rallied, Qualcomm Inc. /zigman2/quotes/206679220/composite QCOM +3.85%  has lagged behind. It doesn’t help that the company has been locked in a legal battle with Apple Inc. /zigman2/quotes/202934861/composite AAPL +2.08% , its largest customer. Performance would have been worse had shares not jumped in November on news that Broadcom Ltd. /zigman2/quotes/200646538/composite AVGO +4.60% had made a $130 billion bid for Qualcomm in what would have been the largest tech deal in history. Qualcomm rejected the offer. Its shares finished 2017 down nearly 2%. The company faces plenty of uncertainty in the year ahead, amid rumors that Apple might give up on Qualcomm’s chips altogether.

With its shares up nearly 6% in 2017, Expedia Inc. /zigman2/quotes/202291990/composite EXPE +7.01%  qualifies as a tech laggard as well. Expedia’s stock was up sharply for most of the year but cratered in late October on an earnings miss. Expedia is spending more on marketing, and that weighs on profits. Fellow online-travel agency Priceline Group Inc.   is also upping its ad spending. Its stock finished the year up nearly 19% this year, still trailing the index.

Related: Business travel could be big in 2018, and these companies would lose out

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N/A
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N/A
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$174.19 billion
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$ 477.77
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20.85
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$190.31 billion
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$ 101.02
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P/E Ratio
50.54
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0.00%
Market Cap
$14.87 billion
Rev. per Employee
$721,013
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Emily Bary is a MarketWatch reporter based in New York.

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