The mega-cap technology stocks have been undecided this year. On one end of the spectrum, there’s Alphabet Inc. (NASDAQ: GOOGL), which is up more than 50% on a year-to-date basis. But in contrast, is Tesla Inc (NASDAQ: TSLA) down about 3.0% from its per-share price at the start of the year.
Terranova’s remarks on CNBC’s “Halftime Report”
The “common denominator” that separates outperformers in big tech names from underperformers this year is stock buyback, says Virtus Investment Partners’ Joe Terranova. On CNBC’s “Halftime Report”, he said:
“I still think you want to be in mega-cap technology names that are buying back their stock. Outperformers like Alphabet, Microsoft, Apple, Facebook, are buying back a significant amount of their shares, versus the underperformers like Netflix and Amazon.”
Terranova also sees potential in many other names in technology, most of which are in the semiconductor space. Personally, he disclosed, he owns Advanced Micro Devices (AMD) and Lam Research.
“With better numbers related to the delta variant, you’re beginning to see a revival in demand. I know the concerns have been on the supply side, but even a modest revival in demand will negate some of the negativity that surrounded the market in the earlier weeks. That directly affects semiconductors,” he added.
Jim Lebenthal’s outlook on big tech stocks
During the same interview, Cerity Partners’ Jim Lebenthal agreed that technology stocks would remain positive in the future, but the reopening trades like financials, airlines, energy stocks would take the lead.
“Take Apple as an example. The stock has returned 43% per annum over the last five years. That is a rate of growth that cannot continue over the coming five years. It’ll still be a positive returner, but I doubt that it’ll return 43% per annum in the upcoming years,” Lebenthal said.
Here’s what Bernstein’s Toni Sacconaghi thinks is the near-term challenge for Apple Inc.
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Wajeeh Khan
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