After a massive flight to safety in the first half of the year, investors are buying tech again, but leading tech investor Paul Meeks is far from convinced. “I feel this way not because I see the fundamentals of most of these companies getting much better in the short term, but more because investors seem to be starting to look past the short-term weakness of these businesses,” Meeks, manager wallet at Independent Solutions Wealth Management, he told CNBC Pro Talks on Wednesday. Instead, it chooses to stay on the defensive and look for what it considers safer bets within the technology space. “I think the more speculative names in the industry aren’t going to come back for a while, so the smart thing to do would be to keep playing defensive rather than offensive technology,” he said. One of the stocks Meeks likes is tech giant IBM. He noted that CEO Arvind Krishna has transformed the company since his appointment in April 2020, divesting “huge chunks” of the business and putting IBM on a path to revenue growth. The company reported revenue of $15.54 billion in the second quarter, beating analysts’ consensus estimate of $15.18 billion, according to Refinitiv. It also beat earnings. “So now the company is growing at a pretty reasonable rate, when it had been perpetually shrinking quarter after quarter, year after year,” Meeks said. He added that the company pays a “huge” dividend that “even a value investor should like.” Meeks also likes telecom giant AT&T as a “place to hide.” The company is back to being a telecom company, after spinning off its failed venture in Hollywood, according to Meeks, and is gaining market share against T-Mobile and Verizon. AT&T also generates “a lot of cash” and pays a dividend yield of about 5% to 6%, he added. When to do it all “All these companies should have less volatility and be a way for investors to play defensive technology until the offensive technology is favorable again. But when the technology comes back, I want to have AT&T and IBM as big? stocks in my portfolio? No, because then I want to play offense,” Meeks said. But he plans to “wait a little longer” to aggressively reinvest in tech stocks. “Before I do all that, I need to feel more confident that analysts have lowered their estimates to the point necessary to reflect a recession. Even cheap stocks can’t rally meaningfully or consistently until they beat the income i [earnings per share] forecasts have been released,” he said. Read more Asset manager likes this chip stock so much, he’s putting his own money into it Top investor Paul Meeks says chipmakers are ‘gold’ and reveals its ‘must-have’ stocks Tech investor calls FAANG ‘must-have’ stocks to buy dip, and one to avoid Analysts bet any US recession will be ‘short and shallow’, or that the Federal Reserve will step in and lower interest rates as fast as they had risen “I think this current narrative, or the range of potential outcomes, is too optimistic, or at least I’m not convinced yet,” he added. “The best idea.” to make long-term money. on a longer-term horizon, his “best long-term money-making idea” is chip giant Micron, a stock he acknowledged is a contrarian call given the challenging outlook for the ‘company. He said he is looking further, as believes that the glut of memory chips in the market is a “short-term fix” that will burst in a few quarters. “Here you have a dominant country with only two other players in the entire world in an oligopoly,” Meeks said of Micron. “I think over the next couple of years, with all the factors like artificial intelligence demanding more and more chips, more and more chip memory concentration, this stock is going to do particularly well,” he added.
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