Though it’s been a bleak year for the sector, Big Tech could be set to rebound in 2023, Constellation Research Principal Analyst and Founder R “Ray” Wang told Yahoo Finance Live (video above).
“We’ve been hammered,” he said. “It’s been a bad year… However, I actually think it’s going to be a better year in 2023 … Apple’s (AAPL) in a good position in the long-run and they’ve got great services. China is going to re-open. The economy will get better, probably in the second half [of the year].”
He also noted that some of tech’s biggest names – including Google-owner Alphabet (GOOG, GOOGL), Amazon (AMZN), and Microsoft (MSFT) – are all primed to benefit massively from their growing cloud businesses.
“You think about what’s going on with Alphabet, Amazon, and Microsoft – these companies all have amazing residuals that are in the cloud,” said Wang. “These are three-to-five-year deals in the cloud for Fortune 500 companies that are in the hundreds of millions of dollars. These are also pretty strong.”
‘These companies are still growing’
Wang called out enterprise tech as an area he’s excited about, flagging companies like Adobe (ADBE), ServiceNow (NOW), and Workday (WDAY).
“We love the enterprise tech stocks,” he said. “If you look at an Adobe, ServiceNow, or Workday, if you look at these companies, they’re doing really well going forward because they also have these long-term enterprise tech contracts. The theme really is that these companies are still growing. They’re profitable… They’re really strong buys.”
This faith in enterprise tech’s future also bolsters Wang’s expectations for the chip market. In 2022, chipmakers got slammed in the public markets as the chip shortage became a chip glut. Still, Wang said that chips are just too essential across sectors for the weakened demand to last.
“The weakening demand on the consumer chipset is real at the moment,” he said. “However, the experiences that are going to power the future are all in the cloud and in the Internet. By doing that, you’re going to need more data centers… If we do get to some of the metaverse aspirations that people believe we’re headed towards, or even if we get to continued adoption of just the basic cloud, there’s still a huge demand for chips.”
In 2022, the tech-heavy Nasdaq is down about 33% as of market close on Friday.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks.
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