Amazon Stock looks like a buy in 2022


At least we’ll never have to live until 2021 again. The second year of the Covid era has proven to be misleading for tech investors. While the Nasdaq Composite, a reasonable indicator of the sector, was up 23% for the year until the middle of last week, it tracked the return of the index.


S&P 500

by about five percentage points. This is the first time this has happened since 2016. Tech stocks on the whole were strong, but the indices proved to be misleading, with strong performances from a few of the most important components masking some dreadful elements beneath the benchmark. area.

Tech has been deceived by the Covid-related news feed, the anticipation of higher rates, the choppy progression of the reopening, and new skepticism about excessive valuations. While the highflies of 2020 love


Focus on video communications

(symbol: ZM),


DocuSign

(DOCU), and


Okta

(OKTA) fell into the red, investors made big gains with legacy tech names like


Oracle

(ORCL),


HP Inc.

(HPQ), and


Dell Technologies

(DELL). Software may still be eating the world, but in 2021, software stocks may have eaten your wallet.

Here are the main takeaways from the Mad Year of Tech:

Megacaps have diverged. In 2020, the five tech giants: Apple, Microsoft, Alphabet,


Facebook

and Amazon.com, grew by more than 30%. There were other gains in 2021, but the returns have varied considerably.


Alphabet

(GOOGL), the group lagging behind in 2020 with just 31% gain, topped the pack in 2021, bringing together 68%, thanks to strong demand for online ads and impressive business growth corporate cloud.


Apple

(AAPL) improved 36%, on top of last year’s peak of 81%, bringing its market capitalization to $ 3 trillion. Strong earnings, impressive demand for the iPhone, and growing buzz about the possible launch of a virtual and augmented reality headset have boosted Apple stocks. During this time,


Microsoft

(MSFT) increased by 54%, the best performance of all


Dow Jones Industrial Average

component, accounting for a quarter of the blue chip index rally, as demand for cloud computing continued to soar.


Meta-platforms

(FB) grew 22% on the year despite a blizzard of bad publicity about the damaging effects of Facebook and Instagram on users. Meanwhile, Apple’s crackdown on tracking iPhone user activity hurt Meta’s ad targeting ability, just as regulatory pressures increased. The New Meta has also launched a $ 10 billion plan to develop the Metaverse, a bold call that may not bear fruit for years, if ever.


Amazon

(AMZN) lagged behind, with only a 5% gain. Growth in its core e-commerce business slowed as some shoppers ventured into physical stores; investors fear that holiday quarter sales will not be estimated. Founder Jeff Bezos has stepped down as CEO, while longtime critic Lina Khan took over as chairman of the Federal Trade Commission, exacerbating regulatory fears. Growth remains robust for the Amazon Web Services cloud business, despite a recent spate of outages. After a lackluster year, the title is the most attractive of tech giants for 2022.


Nvidia

(NVDA) could be next in the trillion dollar club, thanks to a 132% rally that took its market value to $ 750 billion. Once primarily a graphics chip company, Nvidia is now a game on nearly every trending tech trend: cloud computing, cryptocurrency mining, artificial intelligence, self-driving cars, and even the metaverse. Sales jumped 50% in the last quarter.

Video game stocks suffered, with


Activision Blizzard

(ATVI) down almost 30%,


Take-Two Interactive

(TTWO) 14% off, and


Electronic arts

(AE) down 7%. The Activision slide reflects a sexual misconduct scandal that prompted CEO Bobby Kotick to step down. But that’s not the only problem. It was supposed to be a big year for the video game software industry, but component shortages made it harder for consumers to get new consoles.

Telecommunications operators struggled, with


AT&T

(T) 14% reduction,


T Mobile

(TMUS) down 12%, and


Verizon Communications

(VZ) 10% lower. The fierce competition for subscribers has resulted in aggressive discounts on mobile phones, which is good for Apple and for consumers, but less good for carriers.

Streaming was not a panacea for content companies, with


ViacomCBS

(VIAC) and


Discovery

(DISCA) each down 19% and


Walt disney

(DIS) by 16%.


Roku

(ROKU) fell 27%. Their challenge is to manage the decline of linear TV while creating a profitable streaming model, all with theaters struggling to win back their audiences. Chief nemesis


Netflix

(NFLX) rose 17%.

Cloud plays dominated, but it is the hardware rather than the software that has reaped the biggest gains.


Arista Networks

(ANET) doubled, following strong demand for its networking products, especially from cloud players. Other network actions flourished, with


Cisco Systems

(CSCO) up 51% and


Ciena

(CIEN) up 49%. Another cloud winner: the disk drive maker


Seagate technology

(STX), which rose 83%. Once primarily a PC game, Seagate now sells drives for business applications.

Stocks of crisps have skyrocketed for good reason. Component shortages have driven prices up, while demand from the automotive, mobile, cloud and PC industries accelerated. The Philadelphia Semiconductor Industry Index, or SOX, rose 47%. Inventories of smart equipment also flourished—


Materials applied

(AMAT) increased by 89%, while


UCK

(KLAC) jumped 70%. A surprising latecomer was


Taiwan Semiconductor

(TSM), up just 12%. The world’s largest contract chip maker is building new factories to catch up with demand. One issue: rising tensions between Taiwan and mainland China. There are fears that a Hong Kong-style conflict could disrupt operations – this is a growing risk not only for Taiwan Semi, but for the entire tech industry.

Write to Eric J. Savitz at [email protected]


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