Technology

Pain of holding big tech stocks in 2022 – and a great opportunity to buy

Big tech

The first eight months of the year have been brutal for tech stocks. Shopify fell by 78%, Snap was down 77%, and Netflix declined by 64%.

Even the four largest technology companies in the world, Apple, Microsoft, Google owner Alphabet, and Amazon, have suffered severe selloffs.

These stocks had a tremendous run over the last few years and enjoyed lofty valuations, but even with that in mind, many analysts think they are oversold.

As such, the decline in share price may offer a buying opportunity for investors looking for an attractive entry point.

Glassman Advisory chair James Glassman argues that there are three reasons to consider investing in one of the big four tech companies.

  • Adaptability – They all started with a single focus area where they dominate today but have successfully moved into other sectors.
  • Profitability – The big four are tremendously profitable, with a very high return on equity and excellent operating margin.
  • Valuation – The stock prices of the top tech companies plummeted this year, and they are now very cheap.

Glassman said the top tech stocks’ current prices offer a good entry point considering their success and strong market positions.

Kruger International director Mia Kruger agrees with Glassman, saying there are many opportunities in the tech space after the significant selloff this year.

She picked Microsoft as the best option in the current economic climate because of its strong annuity income, making it recession-proof.

Sasfin Securities deputy chairman David Shapiro’s pick is Nvidia, which is down over 50% this year.

Shapiro said the big share price decline does not bother him. “I love the chip companies, even though they have been smashed,” he said.

Big tech companies’ performance in 2022

The table below shows the performance of big tech companies in 2022, ordered from best to worst.

Big Tech Stocks
Company Share price performance YTD
Twitter -6%
Apple -15%
Microsoft -24%
Amazon -26%
Google -26%
Tesla -31%
Adobe -35%
AMD -48%
Snowflake -49%
Paypal -53%
Meta -53%
Nvidia -55%
Spotify -58%
Netflix -63%
Snap -77%
Shopify -78%

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