US Tech Stock Picks: One To Sell, One To Hold, And One To Buy

After analyzing the latest financial data, we’ve compiled a list of three tech stocks you need to know about: one to sell, one to hold, and one to buy. Keep reading to find out which stocks made our list and why. 

Sell: Meta Platforms

Meta Platforms META, Facebook’s parent company, has surged about 43% YTD, but we remain unconvinced. Meta’s ad technology has two levers: demand and price. While ad impressions increased 23% YoY, cost-per-ad-impression decreased 22%, showing that the value of Meta’s ads is exponentially decreasing. The company must continue to cut the price of ads to drive growth, which is not sustainable. In addition, the operating margin continues to decline, and the expensive Reality Labs (Metaverse) division incurred a $4.2B loss for the quarter, becoming a drag on operating income. 

Hold: Apple 

Apple AAPL generated a small 5.4% revenue decline YoY, mainly driven by declining hardware sales, particularly iPhones and Macs. However, the services division (iCloud, Apple Care, etc.) generated $20.8B in revenue and boasts an installed user base of 2 billion devices. Services grew 6.4% YoY, and owning an iPhone or Mac is more or less a membership to paying for services, implying more growth in the future. The issue in China slowed the production of iPhones, and currency headwinds impacted sales by about 8%. Apple isn’t a screaming bargain, but it’s still a solid investment with plenty of potential for growth. 

Buy: Amazon.com 

Amazon.com AMZN is our must-buy stock in the tech industry. The company’s Q4 earnings report exceeded expectations, with revenue reaching $149.2 billion and a YoY growth of 14% in North American retail sales. Despite the previous year’s concerns about the “death” of e-commerce, Amazon continues to deliver with a 23% growth in advertising. With Amazon’s low EV/EBITDA, the company is a compelling buy compared to its peers. Its aggressive expansion in 2019-22 may have led to negative margins, but management’s efforts to rein in costs is likely to achieve 0.5-1% margins in North America by 2024. 

Disclosure: The BlackBull Research US Model portfolio holds financial positions in Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) as of the time of this article's publication. Readers are advised to conduct their own research and consult with a qualified financial advisor before making any investment decisions. The information provided in this article is for informational purposes only and does not constitute financial advice