By Senad Karaahmetovic
Analysts at Bernstein reflected on the firm’s research coverage of U.S. IT Hardware, Semiconductors & Semi cap, and Internet to highlight top names investors should own as the market prepares for the start of the Q3 earnings season.
In IT Hardware, they said they prefer Dell (NYSE:DELL) and Hewlett Packard Enterprise (NYSE:HPE). On Apple (NASDAQ:AAPL), they are worried that the company “may have been a COVID beneficiary, and is not immune to consumer economic weakness.”
As far as semi stocks are concerned, the analysts are worried about excess inventory levels and lack of visibility.
“We prefer AVGO for the 'cyclically nervous,' as well as some secular names (like AMD and QCOM) beaten down potentially more than they should have been. WFE is another area to look at; while the trajectory is a bit uncertain we believe investors are already pricing in fairly negative scenarios, and valuations are becoming attractive. We would avoid INTC,” they told clients in a note.
Among large-cap Internet stocks, Amazon (NASDAQ:AMZN) is reiterated as a Top Pick given “its defensive retail product mix, market leadership in a resilient cloud market, and the potential for significant operating leverage toward the end of the year and into 2023.”
Finally, Bernstein “continues to like” Uber (NYSE:UBER) - still a Top Pick - DoorDash (NYSE:DASH), and Etsy (NASDAQ:ETSY) within the firm’s research coverage of U.S. Emerging Internet companies."
“The most prominent theme this year across Internet is the shift from 'growth at all costs' to 'profitable growth,'” the analysts concluded.