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Last week was a big one for tech earnings, but it ended on a whimper as a series of disappointments left market watchers questioning the strength of the tech rally. The week kicked off with positive earnings surprises from the likes of Meta and Advanced Micro Devices , but ended with misses and negative outlooks from tech giants Alphabet , Apple and Amazon that paint a worrying picture of consumer weakness and renewed fears of an economic slowdown. Investors were quick to react. Shares in Alphabet fell 2.8% and Amazon’s shares fell 8.4% on the same day. The Nasdaq Composite shed 1.6%. Only Apple reversed early losses to close the session 2.4% higher. But market veteran Kenny Polcari, chief market strategist at SlateStone Wealth, is still bullish on Big Tech. “We added Big Tech on weakness, like Apple and Amazon, these stocks are getting arbitrarily dislocated. Apple did end up closing the day on Friday higher even after their report, which just suggests to you that people are still putting money into Big Tech,” Polcari told CNBC’s “Street Signs Asia” on Monday. Outside of the tech giants, his top pick in the semiconductor space is Nvidia . “Semis is another sector that has absolutely taken off this year. It’s up double-digits because it had gotten so clobbered in 2022. So, I do think there’s [an] opportunity for sure, but I don’t think you can go all in on Big Tech just yet,” he said. Nvidia is also a play on artificial intelligence, according to Polcari. It is one of two broad themes he likes in tech, the other being cybersecurity. “I think you really must consider the role that artificial intelligence is going to play but hasn’t played so far. It has made this quantum leap almost overnight. I think that puts it right smack in the front and center of peoples’ portfolios,” he said. STPN – ‘Stuff that people need’ But tech isn’t Polcari’s only way to play the market. In fact, his overall positioning is largely defensive, with his preferred sectors being what he calls STPN, or “stuff that people need.” “The bulk of the portfolio is going to be overweight in consumer staples and healthcare, utilities and energy, and then you’re going to create alpha around the edge with some of the names that have gotten really beaten up,” he said. He believes the market has “gotten ahead of itself,” and now looks “a bit overbought.” “The market is betting that the Federal Reserve can pull off a soft landing — something I do not think they can do, but I just think it will be a longer, more sluggish recession and not a goldilocks type of soft recession,” Polcari said. He believes energy will continue to outperform this year, with a full China opening set to send global demand higher. Against this backdrop, he likes oil giants such as ExxonMobil , Chevron , Schlumberger , and Halliburton
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ReportWire
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