It’s been a bad year for tech. But top investor Paul Meeks is betting on these bright spots
It has been a rough year for the tech sector, as investors pulled out of growth stocks such as tech amid soaring inflation, interest rate hikes and other headwinds that have left investors clamoring for safer bets. The tech-heavy Nasdaq Composite is down around 30% this year. That’s worse than the broad-based S & P 500 , which has fared better, with a 17% decline in the same period. Meanwhile, layoffs and other cost-cutting measures at big tech firms such as Amazon, Meta , Tesla and even Microsoft have added to the pessimism in the sector. Investor confidence in the sector may have been battered, but top tech investor Paul Meeks said he’s now “more bullish” on it than he was in recent months, though he remains selective. E-commerce Meeks is avoiding the e-commerce space altogether, citing concerns about “lackluster” online Christmas spending in the United States and the return of Covid shutdowns in China. “In China, I was starting to feel better about the prospects for online sales growth as the government had started to relax regulations on Chinese technology companies and since there were fewer Covid-19 restrictions, but, of course, now pandemic shutdowns are back in that country,” Meeks, portfolio manager at Independent Solutions Wealth Management, said in notes shared with CNBC. “Therefore, it’s also too risky to invest much in these Chinese [internet] stocks now although I prefer them to their U.S. counterparts since they have better potential upside when China’s economy reaccelerates because their valuations are much cheaper and thus, they are more attractive than their U.S. brethren,” he added. Among the world’s major e-commerce stocks, Meeks said he prefers JD.com to Alibaba and Amazon , though he suggested that “investors wait to buy any of them.” Cyber stocks Cyber stocks, like nearly everything else in the broader tech sector, haven’t been spared from this year’s tech rout. But they’ve been more resilient than the rest of the sector. The First Trust Nasdaq Cybersecurity ETF (CIBR) and the iShares Cybersecurity and Tech ETF (IHAK) are both down by about 22% this year, less than the Nasdaq’s 30% drop. And Meeks is a fan. “I continue to like cybersecurity, which will grow through any type of recession. There is a company called Palo Alto Networks. I still think the cloud has a lot of legs, not just in the US, but also abroad,” he told CNBC’s ” Street Signs Asia ” on Tuesday. Meeks isn’t the only one bullish on Palo Alto . About 90% of analysts covering the stock gave it a “buy” rating and an average upside of 27.5%, according to FactSet data. Within the cloud segment, Meeks likes Arista Networks , Microsoft , Oracle and data storage firm Pure Storage . Semiconductors It’s been a difficult year so far for the once-booming semiconductor sector. In a sign of just how bearish the market has turned on it, the ProShares UltraShort Semiconductors ETF , an inverse exchange-traded fund that bets against the sector, has returned nearly 29% this year, while the PHLX Semiconductor Sector Index (SOX) is down about 32% in the same period. The semiconductor sector has, however, recovered slightly, with the SOX up 14.9% since the end of the third quarter. Meeks counts several chip stocks in his portfolio, preferring names with exposure to the industrial and auto sector. His picks include NXP semiconductors , ASML , Broadcom and Taiwan Semiconductor Manufacturing Company .