Some investors usually have an interest in one sector of the market. They feel tracking their portfolio is harder if their stocks are diversified into multiple sectors. While I'm pro-diversification, I often relate to their point of view.
Whatever your investing style is, having a touch of stocks in the tech sector is a must for most investors. Because the Tech sector has given investors more returns over the past decade, it is not surprising why. Although the tech sector has not been a haven for investors post-2020, some stocks reported good Q3 2022 earnings. This is a sign that not all hope has been lost in the tech sector.
We will look at two tech giants, one with a decent earnings report and the other with less than expected. The goal is to buy one and dump the other.
Apple (NASDAQ: AAPL)
An excellent quarterly earnings report is expected for Apple (NASDAQ: AAPL). And they didn't fail to deliver. Quarterly revenue rose 8%, which is about $90 billion more than the estimated value of $88.9. I find this massively in the face of a strong USD and rising inflation, which affected their sales. The net profit from Apple also surpassed estimated figures. They reported about $1.29 per share, while the average consensus was around $1.27 per share.
Apple also invested about $28 billion in share buybacks and payment of dividends. This was a great strategy to maintain buoyancy when the market was selling off. No wonder their share price performed better than other tech giants during this period.
The only problem I noticed about their earnings report is the declining sales of iPhones and MacBooks. A look at that report showed revenue of $42 billion while the consensus value was about $43 Billion in sales. As much as it was anticipated, considering other factors, such as a super strong dollar that affected foreign sales, I still expected them to beat estimates.
One good thing I like about Apple's business model is how it effectively manages its subscription base. They've successfully increased their subscriber base to about 900 million. In summary, 900 million people actively pay Apple to use their services.
Apple (NASDAQ: AAPL) also did wonders in China. We know how the Chinese environment has been unfavorable, especially for foreign companies and how they've recently undergone a significant economic meltdown; Apple still increased sales in China compared to the previous quarter. Recording $15.5 billion in sales from China compared to the previous quarter's sales of $14.6 billion is suitable for this current period.
Meta (NASDAQ: META)
Maybe it's time to face reality and avoid building castles in the air. I guess no one likes the idea of Metaverse or the world is not ready to accept the idea at this time. Whatever the reason, Meta is paying dearly for investing over $10 billion in the Metaverse concept.
Honestly, I think THAT is Meta's core problem. When you look at the company's core platforms, they all continue to do well and generate substantial cash flow. For example, reports from Facebook were pretty impressive. Facebook reported Daily Active Users of 1.98 billion, which was more significant than the consensus of about 1.86 billion. Not to mention Whatsapp and Instagram, which are essential communication tools for billions of individuals worldwide.
Until this company gets its vision together and strengthens its core business model rather than splashing applicable cash on the Metaverse. Meta NASDAQ: META) is still a stock to dump. The world is simply not ready yet for the metaverse.
Rate this article