The outlook of three analysts on tech is shared by one, who said it was ready for an aggressive rally while another named some interesting stocks within the sector. Chris Watling of Longview Economics is chief executive. On Wednesday, he said to CNBC’s Street Signs Europe that “all we need is some good news from somewhere.” His comments come after a wild week for stocks which saw the S & P 500 briefly enter a bear market on Friday . The tech-heavy Nasdaq Composite — which shed 3.8% over the last week — is already deep in bear market territory, 30% off its highs. “As [Warren]Buffett once said that it is better to be greedy if people are afraid than to be fearful. Watling also stated, “I think it’s time for me to become greedy tactically trading,” Watling responded that technology is the most likely sector to perform well in the coming months when Watling was asked how to invest. “Often the rule of thumb is what’s beaten up the most is what rallies the most … Indicators that we look at show [tech]”It is very beaten up, it should rally quite hard and it should outperform,” said he. On Friday, the Nasdaq lost 27% in the year to date. Super-high-growth stocks vs. Big Tech Michael Purves, founder and CEO of Tallbacken Capital Advisors, said that, looking ahead, it was important to differentiate between the tech giants – such as Apple , Microsoft and Alphabet – and the type of stocks in the ARKK ETF – the “very high-growth story stocks.” Purves said that many of these stocks have corrected 70, 80, or even 90% since their peak one year ago. Purves spoke to CNBC on Friday. Cathie Wood’s ARK Innovation ETF is down over 50% year-to-date. According to Wood, these stocks are echoing “2000-2001-phase”, when the dotcom bubble burst. He said, “Yes, things are correcting now. But the…” [year]2000 arguments can be moved to the high-growth market segment. These are the Microsofts and Googles of this world, which are getting revalued by high interest rates. [they] are arguably the modern form of an electric utility — but with amazing financial metrics, with amazing cash balances to help support earnings growth through share buy-backs going forwards,” Purves added. Mirabaud Securities head of technology and media research Neil Campling stated that the tech sector has “very intriguing opportunities”. Particularly, Campling noted the shift in operations at tech companies, with Netflix making redundancies, Meta stopping hiring and Amazon claiming its warehouses had over-staffed. “These kinds of things are happening now as I think the tech sector refocuses on — not so much chasing revenue at any cost — but actually looking at managing costs and looking at ways to improve margins,” he told CNBC’s Street Signs Europe on Wednesday. Campling stated that one option for companies looking to cut costs is to work with software vendors. “Stocks such as ServiceNow , Workday , Qualys are kinds of companies that can help manage that process in terms of looking for where there is fat … that can be taken out and can really help to drive better efficiencies,” he said. ServiceNow offers cloud-based software. Workday sells HR tech, and Qualys supplies cloud security. “On the corporate level, especially in inflationary environments … the deflationary economics of tech can really stand out for the companies that can offer those kinds of services,” he said of the stocks he named. Bill McDermott, CEO of ServiceNow, said that business software is “the most inflationary force in the universe” because it assists firms with dealing with rising interest rates and prices, as well disruptions to supply chains. CNBC’s Lauren Feiner (Sarah Min) and Hannah Miao also contributed to this report.
A woman is seen walking in the rain near the New York Stock Exchange (NYSE), in Lower Manhattan, during the April 13th 2020 outbreak of coronavirus (COVID-19).
Reuters| Reuters
The outlook of three analysts on tech is shared by one, who said it was ready for a tough rally and the other, which named some stocks that were “very interesting”.