Technology stocks have been in the doghouse, but there’s opportunity to be found there.
With fears of regulations following Facebook’s data scandal, presidential tweets that knocked Amazon.com off its ledge, and production fears at Tesla with a 123,000-unit Model S recall, an on-road fatality, and a poorly timed April Fool’s prank, investors have become fearful of the tech sector.
National Public Radio noted:
"Investors are bailing out of tech stocks, amid concerns that regulators will clamp down on some major companies. Facebook faces backlash from users and lawmakers, for the unauthorized sharing of millions of its users' personal information. Tesla faces scrutiny for its semi-automated driving technology, which ... may have led to a fatal crash. Then over the weekend President Trump signaled his intention of cracking down on Amazon for what he calls unfair business practices."
We also have to consider that technology stocks have been battered by fears of U.S. and China tariffs. Right now, there’s a proposed 25% tariff on Chinese products worth about $50 billion including semiconductors, lithium batteries, electronic components and dishwashers, and China has responded with its own potential tariff on about $50 billion of U.S. products.
As a result of that news, Tech stocks plummeted
- Apple (AAPL) plunged from $177.50 to $167
- Intel (INTC) dropped from $53 to $48
- NVIDIA (NVDA) fell from $250 to $219.
- Advanced Micro Devices (AMD) dropped from $11.50 to less than $9.50
- Micron Technology (MU) plunged from $60 to $49
- Qualcomm (QCOM) fell from $64 to $54
However, many equity analysts see the sector pullback as a buying opportunity.
For example, analysts at Jefferies just upgraded Tesla and is looking for management to take “drastic action on guidance and funding to restore credibility,” as noted by CBS News.
“Analysts aren't totally immune to the fear and uncertainty in the air. They're just much less sensitive to it and continue to hold the most optimism toward tech stocks out of all 11 major sectors.”
They’re getting greedy when others are fearful, as Warren Buffett would advise.
We have to remember that bargains can often be found when others are scared to look. In fact, that’s how we’ve built such a successful track record at The Cheap Investor.