The outlook for cloud investing after shares halved last year – top picks for 23
Cloud computing, enterprise software, and cybersecurity stocks underperformed the broader market in 2022, but a top analyst sees value in the area. The Wisdom Tree cloud computing ETF, which owns Salesforce, Adobe, and Shopify, is down more than 51% over the past year. The First Trust Nasdaq Cybersecurity ETF lost more than 26%. The rapid rise in interest rates and the strengthening US dollar are putting pressure on many of these high-growth stocks, which generate a significant portion of revenue from international markets. “That’s the biggest joker out there,” Dan Ives, a technology analyst at Wedbush, told CNBC PRO about the impact of interest rates on the sector. “The risk we see is Fed driven. They continue to step on the gas pedal with interest rates. They continue to see tech stocks sell off. I think the biggest concern now is what the next step is. Is it a soft one? Macro?” Ives remains bullish on the sector and the trend of companies moving to the cloud, despite recent stock performance. “The important thing is that less than 50% of workloads are in the cloud, so there’s still some Transformation. But no doubt we are beginning to see cracks in the armor and some setbacks and longer sales cycles,” he said. Top picks Ives says his top pick for the sector is Microsoft. Other top picks from Ives are Salesforce, Zscaler, Palo Alto Networks and Crowdstrike But Ives sees another big driver for stocks next year, particularly for smaller names: Mergers Private equity firms worldwide have about $940 billion in dry powder, according to the latest data from Prequin or funds not currently earmarked for investment. Some of this could go to the cloud space. For potential takeout candidates and more on the 2023 outlook for cloud see i m the above video exclusively for the PRO audience.
https://www.cnbc.com/2023/01/11/the-cloud-investing-outlook-after-the-stocks-were-cut-in-half-last-year-top-picks-for-23.html The outlook for cloud investing after shares halved last year – top picks for 23
