While the outlook for technology may face more challenges following the strong NFP, interest rates are expected to remain higher for longer, with Fed Chairman Jerome Powell stating that the Fed will not decrease rates this year.
Meanwhile, poor results from digital behemoths Apple, Amazon, and Alphabet, which have a combined market valuation of over $5 trillion, create a picture of consumer malaise and heighten the prospect of an economic downturn.
However, we see that tech stocks rebounded slightly after the first sell-off following the NFP before falling again. The quick comeback demonstrates that some investors still see potential in some tech equities. It is worthwhile for some investors to seek undervalued technology stocks with great future earning upside.
Microsoft – A big lift by the ChatGPT
Within the cloud space, Microsoft remains a top pick for many on Wall Street, despite issuing a lacklustre revenue forecast last month for the current quarter.
Microsoft continues to be one of the most dominant names in the technology world. Their most recent announcement of announcing $10 billion in the generative AI software ChatGPT marks a significant step toward the future success of the company.
With an earnings-per-share beat and its cloud segment beating consensus estimates, we believe Microsoft is a long-term buy for investors with a longer time horizon.
Meta – Buy dips opportunity does exist
Even though the stock was hammered last year, Meta's main business remains profitable. Meta appears to be a great long right now since we feel the company is undervalued relative to what it should be.
Another positive catalyst for Meta would be Tik Tok's prohibition, which appears to be all but certain at this time. Surprisingly, Meta has been successful in combating the popular Chinese video app. Instagram and Facebook usage seems to rise since reaching a bottom in November 2021.
There are not many firms that can claim that over half of the world's population utilises their goods regularly, but Meta can. There are not many equities that have dropped this much.
Zoom - Expansion into adjacent markets makes it alive again
Zoom is another undervalued company because of its strong management team and development in other areas. Despite competition from Microsoft Teams, we believe Zoom has a good position in a duopoly market and will continue to grow.
Fullerton Markets Research Team
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