Tech stocks have traversed a rocky road since we turned the calendar over to 2022.
General fears that the pandemic recovery was fully priced in heading into the new year, coupled with concerns about inflation and higher interest rates, caused many of the biggest and most widely held names out there to take a spill.
And the equities market has become even more volatile lately amid Russia’s invasion of Ukraine – creating even bigger headwinds for already struggling tech stocks.
Sure, there are times when a stock takes a beating for good reason. One-time growth darling Netflix ( NFLX ), for instance, waved red flags in its January earnings report about future subscriber growth, sending shares tumbling to a nearly 22% single-session loss as a result.
However, some of the best tech stocks have been beaten down without the same kind of headlines to blame. And in some cases, popular tech stocks have seen declines despite earnings reports that show a decidedly positive outlook.
If you’re interested in looking beyond the day-to-day volatility, here are 10 beaten-down tech stocks trading at stiff discounts relative to where they started the year. The names featured here will likely be familiar to most investors and all have solid growth prospects over the long term.
Data is as of March 7. Alphabet
Market value: $1.7 trillion
Year-to-date decline: -12.8%
Google parent Alphabet ( GOOGL , $2,527.57) announced earlier this year it would execute a 20-for-1 stock split in July , taking its share price down significantly to allow for greater liquidity in trading. But investors might not want to wait until that restructuring, because in many ways, GOOGL stock could already be “cheap” – despite its price tag of roughly $2,500 a share at present.
That’s in part because Alphabet is humming along quite nicely, with projections of an 18% increase in its top line this fiscal year and another 15% rise in fiscal 2023. Part of this improvement is because Google’s ad network remains the go-to platform for digital marketing, and we continue to see brisk growth in this category. Consultancy firm Zenith Media has estimated that of all global ad spend, 60% of marketing budgets are dedicated to digital channels.
But it’s also because Alphabet’s only serious rival to reach digital channels is social media giant Meta Platforms. And FB has been hard hit by a series of missteps that have weighed on both user engagement as well as advertisers’ willingness to put their cash on channels such as Facebook and Instagram.
There is certainly a “risk-off” environment in early 2022, but there’s not a lot of risk in the assertion that Alphabet will remain the dominant venue for digital ad spend going forward. That may make this a solid choice for patient investors seeking out discounted tech stocks. Amazon.com
Market value: $1.4 trillion
Year-to-date decline: -17.8%
Aside from the fact that it’s down roughly the same amount as the broader stock market since Jan. 1, what’s not to like about tech giant Amazon.com ( AMZN , $2,749.06)?
It’s the go-to name in e-commerce, with an estimated 40% of all dollars spent online, according to a 2021 analysis conducted by research firm eMarketer. What’s more, AMZN continues to grow as consumers increasingly spend their cash digitally thanks to long-term uptrends in this category.
Digital transformation research company Insider Intelligence estimates that even after the exponential growth in e-commerce seen during the pandemic – a trend that is now baked in to consumer behavior – we’ll still see online retail sales jump an additional 16% in the U.S. in 2022.
If that wasn’t enough, Amazon Web Services (AWS) is an equally compelling reason to love AMZN stock. This platform is the leader in the space, with roughly a third of global cloud infrastructure spend going to Amazon, according to software-as-a-service (SaaS) firm ParkMyCloud.And it’s telling that CEO Andy Jassy, who was brought up in the organization running AWS, took over the reins from founder Jeff Bezos last July. That shows investors the company is looking to this high-growth, high-margin division to carry it forward.Inflationary pressures are not always good for spending trends in the short term, but Amazon has what it takes to thrive for many years to come, so it might be premature to write off this discounted tech stock just because of volatility caused by a broad “risk-off” environment in 2022. Apple Market value: $2.6 trillion Year-to-date decline: -10.3% The fact that many major stock market indexes weight their components by size has undeniably worked against Apple ( AAPL , $159.30) […]
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