Higher rates, inflation, currency, trade tensions – headwinds, for sure, are plenty for the tech stocks at least for now. Still, Daniel Flax (Neuberger Berman) greenlights owning them even in this environment.
Flax explains his bullish view on tech stocks
His constructive view is predicated on billions of dollars worth of investment on research and development that equips the quality names in this space with ability to navigate the current environment. On CNBC’s “Squawk Box”, Flax said:
Their ability to innovate and push ahead in terms of what their customers will find valuable during this period and after this period is foundational to creating value for all constituents in their ecosystems [and for] shareholders.
Then, of course, tech stocks are all the more attractive to own now that valuations have come down significantly in 2022. Nasdaq Composite – the tech-heavy stock market index is down more than 30% for the year at the time of writing.
Flax reveals his favourite stocks in this space
Flax is particularly bullish on the beaten down Amazon.com Inc (NASDAQ: AMZN) and Microsoft Corporation. He also expects Alphabet Inc (NASDAQ: GOOGL) to be an outperformer in 2023 and beyond.
Companies that’re able to invest, innovate, and execute on their product cycles through this will emerge stronger next year and into 2024. Cloud, eCommerce, and digital infrastructure remain healthy even in the face of these cyclical challenges.
Google is set to report its quarterly results on Tuesday. Consensus is for it to earn $1.25 a share, down about 10% on a year-over-year basis. At just over 19 times, this stock is trading sharply below the average of its price-to-earnings multiple over the past five years.
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