Although it’s been a grim year for the sector, 2023 could see Big Tech recover, Constellation Research Principal Analyst and Founder R “Ray” Wang told Yahoo Finance Live (video above).
“We were hammered,” he said. “It was a bad year… However, I think 2023 will be a better year… Apple (AAPL) is in a good position over the long term and has great service. China goes The economy will improve, probably in the second half [of the year].”
He also noted that some of the biggest names in tech — including Google-owners Alphabet (GOOG, GOOGL), Amazon (AMZN), and Microsoft (MSFT) — are all poised to capitalize massively on their growing cloud businesses.
“You think about what’s going on at Alphabet, Amazon and Microsoft — these companies all have amazing backlogs in the cloud,” Wang said. “These are three- to five-year deals in the cloud for Fortune 500 companies that total hundreds of millions of dollars. Those are pretty strong too.”
Google Neon is seen during the reopening of the Google office in a historic building on the Main Square in Krakow, Poland, 29 November 2022. After a nearly seven-year absence, Google has once again hired engineers in Kraków who, together with the hub in Warsaw, will create the largest center in Europe dedicated to Google cloud computing services. (Photo by Beata Zawrzel/NurPhoto via Getty Images)
“These companies are still growing”
Wang identified enterprise tech as an area he’s passionate about, naming companies like Adobe (ADBE), ServiceNow (NOW), and Workday (WDAY).
“We love the corporate tech stocks,” he said. “If you look at Adobe, ServiceNow or Workday, if you look at these companies, they’re doing really well because they also have these long-term enterprise tech contracts. The issue really is that these companies are still growing. They’re profitable… They’re really strong buys.”
This confidence in the future of enterprise technology also strengthens Wang’s expectations for the chip market. In 2022, chipmakers were slammed into the public markets as the chip shortage turned into a chip glut. Still, Wang said chips are just too important across all sectors for weakened demand to continue.
“The slowing demand for consumer chipsets is real right now,” he said. “However, the experiences that will power the future are all in the cloud and on the internet. As a result, you’re going to need more data centers… If we get to some of the metaverse endeavors people think we’re on the way to, or even if we manage to just keep adopting basic cloud, there’s still a lot of demand for chips.
The story goes on
In 2022, the tech-heavy Nasdaq is down about 33% as of Friday’s close.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agafinks.
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