The Nasdaq Composite (IXIC) has been one of the top-performing indices in 2017 with more than 27% return as of Dec 13. We note that robust performance from the technology sector has been the driving factor.

Why Technology Stocks are Gaining Prominence?

Technology sector is benefiting from increasing demand for cloud-based platforms, rapid adoption of Artificial Intelligence (AI) tools, Augmented/Virtual (AR/VR) reality devices, autonomous cars, advanced driver assisted systems (ADAS) as well as Internet of Things (IoT) related software and hardware.

Rapidly expanding IoT market is boosting growth for chip components to power applications, particularly ADAS, medical/healthcare and smart devices.

Semiconductors are mainly gaining from strong demand for power-efficient and high-performance chips. These are essential to run cloud-data centers and process massive data by using IoT analytics, machine learning and deep learning applications.

Further, the server refresh cycle following the launch of processors by Intel (INTC- Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) is a key factor.

Moreover, rapid development of 5G platform and technology has evolved as another catalyst for semiconductor providers. Additionally, growing incidents of cyber attack is anticipated to drive demand for cybersecurity software.

Key Picks

We pick five technology stocks that have crushed the Nasdaq on a year-to-date basis, making them attractive investment options. All stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks Inc (ANET - Free Report) , based in Santa Clara, CA, delivers software-driven, cloud computing networking solutions for data centers. The company has a market capital of $16.29 billion. Moreover, the company’s shares have soared 125.54% to date.

Arista is benefiting from strong demand for 100-gigabit routing and switching products, particularly from cloud titans. Moreover, increasing penetration into additional layers of the spine for routing and data-center interconnect is driving top-line growth.

Arista Networks, Inc. Price and Consensus

Arista Networks, Inc. Price and Consensus | Arista Networks, Inc. Quote

Notably, Arista beat the Zacks Consensus Estimate in all of the trailing four quarters with a positive average of 27.48%.

The Zacks Consensus Estimate for 2017 earnings is currently pegged at $5.33 per share, reflecting a year-over-year growth of 61.6%. For 2018, consensus estimate for earnings are anticipated to improve 25.2% year over year to $6.14.

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IPG Photonics Corporation (IPGP - Free Report) , based in Oxford, MA, develops and manufactures fiber & diode lasers, fiber amplifiers and transceivers that are used for diverse applications like materials processing (93% of total revenues), advanced applications, communications and medical.

IPG has a market capital of $11.01 billion. The company’s shares have surged 107.66% to date.

IPG Photonics Corporation Price and Consensus

IPG Photonics Corporation Price and Consensus | IPG Photonics Corporation Quote

IPG is benefiting from strong adoption of fiber lasers over conventional lasers and non-laser cutting and welding equipment. Moreover, the company’s vertically integrated business model is helping in keeping costs down.

The company beat the Zacks Consensus Estimate in all of the trailing four quarters with a positive average of 14.70%.

The Zacks Consensus Estimate for 2017 earnings is currently pegged at $6.99, reflecting a year-over-year growth of 44.1%. For 2018, consensus estimate for earnings are anticipated to increase 9.1% year over year to $7.63.

Lam Research Corporation (LRCX - Free Report) , headquartered in Fremont, CA, supplies wafer fabrication equipment (WFE) and services to the semiconductor industry. The company has a market capital of $30.20 billion. Shares have surged 71.73% to date.

The improving WFE market, strong demand for server DRAM and increased adoption rates of 3D NAND technology are key catalysts. We believe that the strong demand for bit growth in server DRAM and NAND will continue, driven by cloud computing and IoT. This will create more opportunities for Lam Research in the near future.

Lam Research Corporation Price and Consensus

Lam Research Corporation Price and Consensus | Lam Research Corporation Quote

Notably, Lam Research beat the Zacks Consensus Estimate in all of the trailing four quarters with a positive average of 5.33%.

The Zacks Consensus Estimate for fiscal 2018 earnings is currently pegged at $14.74, reflecting a year-over-year growth of 47.7%. For fiscal 2019, consensus estimate for earnings are anticipated to inch up 1% year over year to $14.84.

NetApp Inc. (NTAP - Free Report) , based in Sunnyvale, CA, provides enterprise storage and data management software and hardware products and services. The company has a market capital of $15.54 billion. Shares have surged 63.88% to date.

NetApp is benefiting successful ongoing transition from underperforming segments to growth oriented sectors like all-flash arrays and hybrid cloud and data fabric strategies were additional tailwinds.

NetApp, Inc. Price and Consensus

NetApp, Inc. Price and Consensus | NetApp, Inc. Quote

Notably, NetApp beat the Zacks Consensus Estimate in all of the trailing four quarters with a positive average of 11.45%.

The Zacks Consensus Estimate for fiscal 2018 earnings is currently pegged at $3.31, reflecting a year-over-year growth of 21.1%. Moreover, consensus estimate for fiscal 2019 earnings is anticipated to rise 8.5% year over year to $3.59.

NVIDIA Corporation (NVDA - Free Report) , based in Santa Clara, CA, is a worldwide leader in visual computing technologies and the inventor of the graphic processing unit (GPU).

NVIDIA has a market capital of $116.04 billion. The company’s shares have returned 78.79% to date.

NVIDIA Corporation Price and Consensus

NVIDIA Corporation Price and Consensus | NVIDIA Corporation Quote

NVIDIA’s sustained efforts toward attaining robust position in several emerging industries such as Artificial Intelligence (AI), deep learning and driverless cars industry, makes us optimistic about its growth prospect.

Moreover, the company’s innovative product pipeline and strength in gaming and high-end notebook GPUs are key catalysts.

NVIDIA has outperformed the Zacks Consensus Estimate in all of the trailing four quarters with a positive average of 33.51%.

The Zacks Consensus Estimate for fiscal 2018 earnings is currently pegged at $4.19, reflecting a year-over-year growth of almost 63%. For fiscal 2019, consensus estimate for earnings are anticipated to increase 11.4% year over year to $4.67.