One thing smart investors should keep in mind is things that are said and promised during a red-hot election need to be taken with a gigantic grain of salt. With Donald Trump winning the White House, many investors are immediately scared of huge protectionist trade policies. These cannot be imposed unilaterally, and needless to say, the rhetoric will give way to common sense solutions.
One sector getting absolutely destroyed is technology, over fears of trade changes with China and a host of other issues, not the least of which was rhetoric directed at Trump from high-profile Silicon Valley executives. Cooler heads will prevail, as Trump knows that technology is an engine of growth, strength and jobs in the United States.
We screened the Merrill Lynch research database and found four high-profile mega-cap technology stocks that have been hammered. Known in Wall Street parlance as the FANG stocks, they represent the biggest and best in technology. While only suitable for more aggressive-styled accounts, the ability for investors to buy partial positions cheap is very enticing.
The search giant continues to expand and is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) provides online advertising services in the United States, the United Kingdom and rest of the world. It offers performance and brand advertising services, and it operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.
The Google segment also sells hardware products, comprising Chromecast, Chromebooks and Nexus. The Other Bets segment includes businesses such as Access/Google Fiber, Calico, Nest, Verily, GV, Google Capital, X and other initiatives.
The company reported earnings last month against some very tough comparisons from this time last year. Alphabet announced fiscal first quarter results that produced 20% year-on-year growth in revenues to $22.45 billion, in line with most expectations. On a constant-currency basis, revenues grew 23%. Google segment revenues for the quarter were up 20% over the prior year. While Google’s operating profit grew by 16.7%, the operating margin declined by just under 1% basis point.
The Merrill Lynch price objective for the stock is $970, while the Wall Street consensus target price is $963.74. The shares closed Friday at $771.75, down a whopping 10% in the past three weeks.
This company is the absolute leader in online retail and a dominant player in cloud storage business. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers. In addition, the company serves developers and enterprises through Amazon Web Services (AWS), which provides compute, storage, database, analytics, applications and deployment services that enable virtually various businesses.
AWS is the undisputed leader in the cloud now, and many top analysts team see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market. The company has had numerous recent product announcements, including Aurora for relational database engine, Quick Sight for business intelligence and AWS Database Migration Support Service.
Amazon reported a mixed quarter in October, and top analysts around Wall Street noted that revenues were in line and margins were soft. Guidance was below expectations as the company continues to invest, but the sales midpoint was also below expectations. Many suggest buying the dip as nothing here changes the view that Amazon is best positioned to benefit from the shift of commerce from offline to online, and it is also looking to expand to Australia.
Merrill Lynch has a $960 price target, and the consensus target is $921.63. Shares closed Friday at $739.01, down 12.3% in just over two weeks.