Falling big-cap tech and tech-related stocks are a big reason the S&P 500 is struggling this year. But analysts have their favorite if you’re looking to play a rebound.
Analysts who follow fundamentals closely think fallen FANG stock Netflix (NFLX) is the “tech” stock you’re likely to make the most on, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Analysts, on average, think this communication services company’s stock will rise nearly 60% in the next 12 months.
That’s more price appreciation they expect from any of the FANG stocks or any of the top seven most valuable stocks on the S&P 500. Of course, savvy investors know to pay attention to S&P 500 stock charts for the right buy point.
Sizing Up The Tech Implosion On The S&P 500
If you’re not feeling the tech crash, you’re not paying attention. It’s epic.
Year-to-date drops by just seven technology stocks in the S&P 500 account for more than 40% of the S&P 500’s total percentage drop, says DataTrek Research. All seven of the former do-no-wrong stocks are down on the year by an average of nearly 30%.
And that’s a big issue for all investors, even if you just own S&P 500 index funds. Just seven big tech names, Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Tesla (TSLA), Meta Platforms (FB) and Nvidia (NVDA), account for roughly a quarter of the S&P 500.
So their underperformance weighs more on the S&P 500 than arguably any other segment of the market. Apple alone accounts for 6.6% of the S&P 500.
Additionally, the crash in these stocks hasn’t deflated their valuations by much. Amazon, for instance, is still trading for nearly 80 times its expected profit in the next 12 months, says DataTrek. Meanwhile, analysts are viciously slashing how much profit they think these high-profile companies will make. Analysts cut their current year profit target on Amazon by nearly 70%, says DataTrek.
“Analysts and investors thought the world had changed permanently, toward a tech-enabled online future. That lifted earnings and valuations, but now we’re seeing those were unsustainable,” said DataTrek’s Jessica Rabe.
