Analysts Say These Stocks Are A Good Buy As Tech Gets Battered Again

As a result of the collapse of Silicon Valley Bank, the tech sector has become more volatile, particularly as expectations are that interest rates are likely to remain high for the foreseeable future.

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This morning, the tech-heavy Nasdaq Composite closed 0.45% higher than it did on Monday. As a result of the closure of Silicon Valley Bank, the stock price has dropped by 1.76% since Friday. There was also the closure of the crypto-focused Signature Bank.

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The Federal Reserve Chairman Jerome Powell said last week that interest rates are likely to remain "higher than previously expected" - usually regarded as bad news for the country's tech sector. In the last couple of weeks, there have been a series of earnings misses and a series of layoffs at tech giants, including a planned second round of redundancies at Meta, which have added to the nerves in the sector.

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There are some market pros, however, who see the volatility as an opportunity to purchase bargain growth stocks.

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“From our perspective, the recent bout of volatility you have seen represents a buying opportunity for medium- and long-term investors,” Anthony Doyle, head of investment strategy at Firetrail Investments, told Trade Algo on Monday that he believed represents a buying opportunity for medium and long-term investors.

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“The valuations of some tech firms have been hammered,” according to him.

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In the meantime, Phillip Wool, managing director, and co-founder of Rayliant Global Advisors explained that he is bearish on U.S. stocks in general, but this will give way to bargain hunting as lagged damages from the Fed's policy start to show up, and greed turns to fear as a result.

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Big Tech stock picks

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Sylvia Jablonski, chief investment officer at Defiance ETFs, warned investors last week to watch for pullbacks before stocks started to fall off the cliff.

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“It has been observed that the top days in the market have coincided with either recessions, crises, or pullbacks over the past several decades,” she told Trade Algo in an email.

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“I think the chances are very high that, if you're an investor who intends to be in business beyond 2024 when we'll have a little more certainty at that point, you will be buying [at] lower levels today than you will be in that timeframe or definitely a decade from now if you're in it for that timeframe,” she added.

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BD8 Capital Partners' Chief Information Officer, Barbara Doran believes that the technology sector has been on a roll and is holding up despite concerns about higher interest rates in the market.

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According to her, she is refocusing her investment efforts on large-cap tech companies given the promise of artificial intelligence - one of the hottest tech themes this year - and the fact that their valuations are historically attractive.

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Her target price for Meta is between 15% and 35%, which is a bullish forecast for the stock. Despite its stock price rising by about 50% this year, it is still losing money in spite of its gains.

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There has been an increase in Meta's users and engagement across all platforms, according to Doran, and the company has also grown the monetization of its Reels platform, as well as increased its financial discipline as a result.

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She also recommends Apple stock, citing its growing share in high-end smartphones outside the United States, as well as its ability to compete with major rival Samsung in terms of market share.

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Defiance's Jablonski highlighted that the top stock picks from major Wall Street banks are largely tied to AI and machine learning.

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“With a basket of stocks ranging from semiconductors to quantum computing and the use of artificial intelligence and machine learning, stocks in the lead in these areas are likely to pay off in the long run,” she said.

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Jablonski said that AI is expected to grow at a compounded rate of 37% by 2026, which is based on research from a global market intelligence firm called International Data Corporation. “That’s not so far off.”

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Among the companies that Jablonski identified as likely leaders in the space are Microsoft, Nvidia, Advanced Micro Devices, Alphabet, and Amazon, who he believes are currently trading at a “great opportunity” because they are trading at “double digits from their 52-week highs.”

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There is an exchange-traded fund, The Next Generation Quantum Computing & Machine Learning ETF, managed by Defiance ETFs. As of the end of February, it had gained more than 11%.

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CI Barrett Private Wealth's chief investment officer, Amy Kong, calls Microsoft a "stellar company" that has a good business model, calling it a "stellar investment opportunity".

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It is expected that, over the next quarter, the cloud computing business of the company will grow by about 30%, and she noted that the company generates a lot of free cash flow and has a lot more growth engines than Alphabet.

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Despite the volatility in Microsoft's share price, Firetrail Investments' Anthony Doyle is a big fan of the stock, and he is bullish about it.