RBC's Mahaney: Tech 'Reckoning' Already Occurred

Should investors look at Apple Inc. AAPL's guidance warning as a sign that the broader tech sector will tumble?

That "reckoning" has already taken place, according to RBC Capital Markets' Mark Mahaney.

What Happened

Speaking as a guest on "Bloomberg Technology" Thursday, Mahaney said tech stocks have already sold off over the past few months, adding that some big tech names are now oversold.

Most notably, Alphabet Inc GOOG GOOGL and Amazon.com, Inc. AMZN are lower than their 2018 highs, but "none of their fundamentals have changed at all" — and Street estimates haven't been revised to the downside, the analyst said. 

Google and its parent company Alphabet are "extraordinarily consistent," Mahaney said, citing the company's 35th consecutive quarter of growth. This performance is "unheralded in financial history," but the stock is trading at only a small premium to the broader market, he said. 

Alphabet and Amazon offer investors attractive risk-reward opportunities that are not necessarily the "best we have ever seen," but certainly "in the top quartile of buying opportunities," Mahaney said. 

Analyst Sees Opportunity In Facebook 

Facebook, Inc. FB said in December it will be buying an additional $9 billion worth of its own stock on top of its $17-billion buyback authorization in 2017. The company is essentially putting its money where its mouth is, especially given the large amount of cash on Facebook's balance sheet, Mahaney said.

Facebook must "earn back" trust it lost due to privacy scandals, but every brand can be damaged and fixed, the analyst said. Despite the research firm's checks and surveys pointing to declining satisfaction among advertisers, Facebook still controls the two largest social media platforms and messaging apps in the world, he said. 

With the exception of Facebook's core platform, the other platforms are either in the early stages of monetization or haven't started, Mahaney said. 

"Don't you want to own that asset before they start monetizing?" the analyst said. "Unless you think they can't structurally be monetized, which I don't think is true."

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