Investors are buying back into tech after a massive flight to safety in the first half of the year — but top tech investor Paul Meeks is far from convinced. “I don’t really think so because I see the fundamentals for the majority of these companies improving a lot in the near term, but more because it seems like investors are beginning to overlook the near-term weakness of these companies,” Meeks, Portfolio manager at Independent Solutions Wealth Management, CNBC told Pro Talks on Wednesday. Instead, he chooses to remain defensive and seeks what he believes to be safer bets within the technology space. “I think the more speculative names in the industry aren’t going to come back for a while, so it would be wise to continue playing defensive rather than offensive tech,” he said. One stock Meeks likes is tech giant IBM. He noted that CEO Arvind Krishna has transformed the company since his appointment in April 2020, divesting “large chunks” of the business and putting IBM on a revenue growth path. The company posted revenue of $15.54 billion in the second quarter, beating analysts’ consensus estimate of $15.18 billion, according to Refinitiv. It also delivered a punch to the result. “So now the company is actually growing at a pretty reasonable pace while it’s been steadily shrinking quarter after quarter, year after year,” Meeks said. He added that the company pays a “heavy” dividend that “should please even a value investor.” Meeks also likes telecom giant AT&T as a “hiding spot.” The company is now back as a telecoms company after winding up its failed Hollywood venture, Meeks said, gaining market share from T-Mobile and Verizon. AT&T also generates “a lot of money” and pays a dividend yield of about 5% to 6%, he added. When to Go All-In “All of these companies should offer less volatility and be a way for investors to play defensive tech until offensive tech comes back into fashion. But when technology comes back, do I want AT&T and IBM as big stocks in my portfolio? No, because then I want to attack,” said Meeks. But he plans to “wait a little longer” to start investing aggressively in tech stocks again. “Before I go all in, I need to be more confident that analysts have lowered their estimates enough to reflect a recession [earnings per share] Forecasts have been released,” he said. Money manager likes this chip stock so much he’s putting his own money in “must own” FAANG stock to buy the drop — and one to avoid, Meeks says. “I think that current narrative or range of possible outcomes is overly optimistic, or at least I’m not convinced of it yet,” he added. “The best idea” for making money in the long run is his “best idea to make money in the long run” chip giant Micron — a stock he conceded is a contrarian call given the company’s challenging outlook. He said he’s looking past it as he believes the glut of memory chips the market is in a “Short-term correction” that will be over in a few quarters. “Here’s a com company that dominates in an oligopoly with only two other players worldwide,” Meeks said of Micron. “I think this stock will do particularly well over the next few years with all the drivers like artificial intelligence, which is demanding more and more chips and more and more chip concentration of memory,” he added.
