2022 is going to be a tough year for tech stocks, with tech-heavy NASDAQ posting a staggering 33.1% decline at the end of the year. Unfortunately, 2023 doesn’t look too good as the NASDAQ continues to lag behind the S&P 500 and the Dow. The industry continues to face the same challenges as last year, including production problems, mass layoffs and tighter regulations.
Case in point: Apple. (AAPL) fell 3.7% on Tuesday to its lowest level since June 2021, driving its market cap below $2 trillion as concerns over production problems in China continue to weigh on shares.
Tesla Inc. (TSLA) suffered similar production problems. The company’s planned eight-day shutdown of its Shanghai factory has been extended until the end of January, in part due to rising Covid cases and slowing sales in China. It should also be noted that earlier this year, electric vehicle (EV) makers disclosed that they were underperforming their shipment forecasts for the fourth quarter. This caused inventory to drop by 12% from his on Tuesday. By Friday, TSLA was dangerously close to breaking $100 and continued to fall throughout the week.
But is a technological turnaround possible?
In a nutshell? No.
First, earnings season last year saw tech companies perform significantly worse. Amazon.co.jp (AMZN), Google (goog), meta platform (meta) and further microsoft (MSFTMore) all posted disappointing results for the latest quarter.
Here’s the problem: I’ve been in this situation before. I was here when the tech bubble burst in March of 2000. At that time, 54% of the S&P belonged to his seven giant tech stocks. And for the next seven years, the tail end of the S&P 500 (the bottom 10% stocks by market cap) outperformed the top end.
So what’s going to happen is we’re going to see net selling in some of the major flagship stocks that aren’t as profitable as they used to be. Googles, Amazons, Metas, and even Microsofts keep dropping their guides. As a result, these stocks will come under sustained selling pressure.
We don’t know seven years from now, but we do know a few years ahead. There is one bucket of stock that should be the primary beneficiary of outflows from major tech companies.
The main benefactor of major technology spills
You probably already know what I’m talking about… energy. It’s no secret that I’m incredibly bullish on energy stocks right now.That’s why I decided to hold a special event – my big energy bet – Yesterday we discussed opportunities in the energy sector this year. (If you missed the event, you can watch the replay here.)
But here we can say that the energy sector is about to have a strong year, the best performing sector in 2022. The energy sector surged about 59% while the S&P 500 fell almost 20%.
Energy stocks got off to a slow start this year, but I fully expect this strength to continue into 2023. Indeed, the weights of technology and energy stocks in the S&P 500 are shifting. Just a year ago, energy made up less than 2% of him in the S&P 500, while technology made up about 48%. We also expect energy stocks to account for 30% of the S&P 500 in early 2025. Tech stocks fall to about 32%.
With this leadership shift now underway, the stocks with the biggest earnings surprises in Q4 are poised to become the new market leaders in 2023. Also, FactSet now estimates that the energy sector now expects to record 64.4% revenue growth for him.
If my predictions are correct, this should be a phenomenal year for the energy sector. That’s why I’m making a ‘big bet’ on the energy sector this year. But this kind of “big bet” doesn’t happen very often.
Yesterday’s big energy bet eventI explained why I believe the energy sector will be the dominant force in the economy for years to come and why this is only the early stages of an incredible rise. Inside, we’ve shared the best opportunities in the energy sector, including free stock picks, ticker symbols, and more.
if you miss me big energy bet event, you can watch the replay here.
Sincerely,
Source: InvestorPlace unless otherwise noted
Louis Naberier
The editor hereby discloses that as of the date of this e-mail, the editor owns, directly or indirectly, the following securities: Below is the essay.
Amazon.com (AMZN), Google (goog), meta platform (meta), Microsoft (MSFTMore)