Analysts from leading investment banks say a number of tech stocks are presenting attractive buying opportunities right now – with more than 30% off their 52-week highs. A storm of headwinds has hit tech stocks and investors are wondering which names are nearing bottom, according to Bank of America. “Technology is facing a quadruple whammy of rising discount rates, maximum globalization, tough competition and congestion,” BofA analysts said in a May 27 research note. “But the screen requests are for downed growth stocks, not cheap energy stocks.” The bank said investors remained 23% overweight in technology, media and telecom stocks, “and their muscle memory of making money buying on the downside in tech must fade before that technology does not collapse”. Despite this, BofA said there are currently buying opportunities in the sector, given its “big” underperformance – the tech is down 24% year-to-date compared to the sector. S & P 500 index which fell 17%. “Some beat tech stocks present buying opportunities at these levels,” the bank said. He picked “beaten tech stocks with strong FCF [free cash flow]which are down more than 30% from 52-week highs. Big tech names on the list include Facebook parent Meta, as well as Google owner Alphabet. Semiconductor companies Advanced Micro Devices, Applied Materials and Micron Technology, as well as IT consultancies Accenture and Gartner Bank of America is rated buy on all of these stocks. best value plays in the beaten sector ‘We see a clear role for alternatives’: The pros give their advice on how to trade the volatile market note released May 27. Plus, Credit Suisse analysts led by Andrew Garthwaite chose Microsoft for its pricing power, as well as Salesforce, rating them both as outperformers, with a reference to their fees being tied to rising inflation. the consumer price index, a measure of the cost of goods and services, which rose 8.3% year-on-year in April. BofA said it took about a decade for the tech sector to recover after the dotcom crash of 2000, when “investors forgot about technology.” The bank’s analysts recommended being selective and taking advantage of volatility. “One in four IPOs in 1999 is now a safe bet and surviving IPOs have increased by [around] market capitalization of 400%,” they noted. UBS strategists also said it might be time to buy tech stocks, in a research note published May 27. “Global tech stocks have fallen since April due to growth issues,” they noted. “Investors may consider rebalancing portfolios to increase exposure to quality technology companies,” the analysts added. UBS didn’t pick stocks but noted sectors it likes, including artificial intelligence, big data, cybersecurity and robotics.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 10, 2022.
Brendan Mcdermid | Reuters
Analysts from leading investment banks say a number of tech stocks are presenting attractive buying opportunities right now – with more than 30% off their 52-week highs.