Analyst thinks Big Tech will have its best year in 2023

While it’s been a bleak year for the sector, big tech could bounce back in 2023, R “Ray” Wang, chief analyst and founder of Constellation Research, told Yahoo Finance Live (video above).

“We were beaten,” he said. “It was a bad year… However, I actually think 2023 will be better… Apple (AAPL) is in a good position in the long run and they have great services. re-open. The economy will improve, probably in the second half [of the year].”

He also noted that some of the biggest tech companies, including Alphabet (GOOG, GOOGL), Amazon (AMZN), and Microsoft (MSFT), are poised to capitalize enormously on their growing cloud business.

“Think about what’s happening with Alphabet, Amazon and Microsoft — all of these companies have amazing leftovers that are in the cloud,” Wang said. “These are three to five year cloud deals for Fortune 500 companies worth hundreds of millions of dollars. They are also quite strong.”

Neon lights during the opening of the Google office in a historic building on the main square in Krakow, Poland, on November 29, 2022.  After nearly seven years of absence, Google has reopened in Krakow, hiring engineers who, together with a hub in Warsaw, will create the largest center in Europe for Google cloud computing services.  (Photo by Beata Zavrzel/NurPhoto via Getty Images)

Neon lights during the opening of the Google office in a historic building on the main square in Krakow, Poland, on November 29, 2022. After nearly seven years of absence, Google has reopened in Krakow, hiring engineers who, together with a hub in Warsaw, will create the largest center in Europe for Google cloud computing services. (Photo by Beata Zavrzel/NurPhoto via Getty Images)

“These companies are still growing”

Wang cited enterprise technology as an area he is passionate about, citing companies such as Adobe (ADBE), ServiceNow (NOW), and Workday (WDAY).

“We like corporate technology stocks,” he said. “If you look at Adobe or ServiceNow or Workday, if you look at these companies, you can see they are moving forward really well because they also have these long-term enterprise technology contracts. The bottom line is that these companies are still growing. … They’re profitable… They’re really bargains.”

This belief in the future of enterprise technology also supports Wang’s expectations for the chip market. In 2022, chip makers faced challenges in the public markets as a chip shortage turned into a chip glut. However, Wang said the chips are too important across sectors for weakened demand to continue.

“Declining demand for consumer chipsets is real right now,” he said. “However, the experience that will define the future is in the cloud and online. That being said, you will need more data centers… If we do achieve some of the aspirations of the metaverse, which believe we are moving towards, or even if we achieve further adoption of just the underlying cloud, there is still a huge demand for chips.”

In 2022, the Nasdaq Tech Index is down about 33% as of Friday’s market close.

Ellie Garfinkle is a senior tech reporter for Yahoo Finance. Follow her on Twitter at @agarphinx.

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