While it’s been a bleak year for the sector, Big Tech could bounce back in 2023, Constellation Research chief analyst and founder R “Ray” Wang told Yahoo Finance Live (video above).
“We’ve been beaten,” he said. “It was a bad year… However, I think 2023 will be better… Apple (AAPL) is well positioned in the long term and has great services. China is going to reopen. The economy will improve, probably in the second half [of the year]”.
He also noted that some of the biggest tech companies – including Google owner Alphabet (GOOG, GOOGL), Amazon (AMZN) and Microsoft (MSFT) – are poised to take huge advantage of their burgeoning cloud businesses.
“You think about what’s going on with Alphabet, Amazon and Microsoft – all of these companies have amazing cloud leftovers,” Wang said. “These are three to five year cloud contracts for Fortune 500 companies worth hundreds of millions of dollars. They’re also pretty strong.”
“These companies are still growing”
Wang has named enterprise technology as an area that excites him, tagging companies like Adobe (ADBE), ServiceNow (NOW) and Workday (WDAY).
“We love enterprise tech stocks,” he said. “If you look at Adobe or ServiceNow or Workday, if you look at these companies, they’re doing really well going into the future because they also have long-term contracts for enterprise technology. The theme really is that these companies are still growing. They’re profitable… It’s a really strong buy.”
This belief in the future of enterprise tech also reinforces Wang’s expectations for the chip market. In 2022, chip makers were hit in the public markets as a chip shortage turned into an overabundance of chips. Still, Wang said chips are simply too essential across sectors for weakened demand to survive.
“Weakening demand for consumer chipsets is real at the moment,” he said. “However, all the experiences that will drive the future are in the cloud and online. That way you’re going to need more data centers… If we meet some of the aspirations of the metaverse that people believe we’re moving in that direction, and even if it comes to continuing to just adopt basic cloud, there’s still a huge demand for chips.”
In 2022, the tech-savvy Nasdaq is down about 33% since the market closed on Friday.
Allie Garfinkle is a senior technical reporter at Yahoo Finance. Follow her on Twitter at @agarfinks.
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