The rotation out of high-growth tech names rolls on.
The Nasdaq 100, which has a heavy tech focus, has come under pressure again, and more than half of its components are now in a correction or worse. Some of the worst hit, such as Zoom Video, Peloton, Splunk and Baidu, have fallen more than 40% from their 52-week highs.
Nancy Tengler, chief investment officer at Laffer Tengler Investments, highlights one Nasdaq 100 component as the stock best positioned to rebound.
“It would be Microsoft,” Tengler told CNBC’s “Trading Nation” on Tuesday. “This is not March of 2000 when the 10-year was at 6.5%, and we were at the end of a business and earnings cycle. In fact, tech capex is now about 50% of total capex, so we want names [that] are going to participate and benefit from that.”
Tech has generally underperformed this year on fears of inflation and a rise in yields. The 10-year Treasury yield has climbed to 1.63%, still historically low, as Tengler notes.
“Microsoft has sort of been trading sideways, in line with the market this year, but grew revenues at 90% last quarter and raised guidance,” she said. “We like revenues because they’re a fact, so this is a company we want to own for the next three to five years or you want to buy for your grandkids.”
Bill Baruch, president of Blue Line Capital, is also bullish on Microsoft and sees technical signs that suggest more gains ahead.
“Ahead of earnings, they had a tremendous run. We trimmed our positions in half in Microsoft ahead of earnings. I’m simply putting that back on here [Tuesday],” Baruch said during the same interview.
“It hit a trendline … from the March lows here [Tuesday] at about $240, so I think that’s going to be a big support, and we’re going to see a rise here from there. I like Microsoft, and I think that’s going to be a leader,” he said.
Microsoft has fallen 6% from late April highs. It’s down 4% in the past month.
Disclosure: Blue Line Capital and Laffer Tengler Investments hold Microsoft.
