The technological bounce but, will it prolong its comeback?

The technological bounce but, will it prolong its comeback?

Some analysts warn that the actions have run a lot and consider that the best options are the most defensive

  The Nasdaq 100, from the minimums that marked the 24 of last December, has come to recover almost 20% until the last two or three sessions in which the stock exchanges were again complicated their journey. It is a little more than what the Dow Jones has managed to gain in the same period (16.5%). Beatriz Catalán, of Ibercaja Gestión, explains that the technological upturn is due to the fact that the previous cuts had been supported by unjustified fears of imminent recession, which would lead to a total paralysis of semiconductor consumption.

  Sales had also found motivation in the resurgence of a tariff war that would severely affect technology companies. "But in January the tariff hostility has relaxed with the talks that China and the US have embarked on. And the companies, although they have been publishing short guides, these have not been as low as it was feared », explains this analyst.

Eduardo García-Argüelles, from GVC Gaesco, explains that technological upturn by presenting results. "The season of accountability has made investors realize that the fundamentals of the sector were not as bad as they initially thought," adds Brice Prunas, of Oddo BHF AM.

Jeremy Gleeson and Tom Riley, managers of the robotics and digital economy funds of AXA, add to the above factors the more cautious tone of central banks and believe that the good evolution of the sector can continue. "Although geopolitics and a weaker sentiment are at the forefront of investor concerns," the fundamentals of business remain strong. "

Risk factor's
Other analysts are more cautious, like Ignacio García, of A & G Banca Privada: "The movement is already done. Now it remains to be confirmed that the figures reported will be supported throughout the year, despite the economic slowdown. " Prunas agrees: "In order for this technological rally to continue, we need companies to fulfill their promises of sequential growth throughout the year."

Hernando Lacave, of Dif Broker, warns that there are risk factors to be taken into account: "The greatest is that the commercial tension between China and the US increases." Also remember that there are still results to be made public. And it adds, as a possible positive catalyst, that the lower growth of the Asian giants will make its central bank react, since it has a great margin of maneuver to launch incentives, and this can boost the country's demand for technological goods.

Catalan says that the sector has run a lot and believes that the best thing would be to get out: "We are in a late phase of the cycle and, in the face of any bad symptom, the contributions suffer. This year will be weak in sales and the results will not be so bright. We do not know how the conflict between China and the US will end, and it is better to protect oneself a bit. " He argues that it is best to have exposure to sub-sectors that, within technology, tend to suffer less in times of slowdown, such as software and consulting.

Johannes Jacobi, of Allianz GI, agrees that the selection of actions will be essential to capture the benefits of the opportunity that artificial intelligence and digital transformation suppose, especially at a time of high volatility and dispersion in returns.

What values?
García-Argüelles adds: "The Nasdaq trend is bullish, but it rose too much in a short time, so for now we would stay on the sidelines, except for concrete values." This analyst would opt for acyclic and defensive companies. As Prunas points out, "the cyclical technological sub-sectors (semiconductors, hardware) have been the winners of this January rally."

Lacave says that in addition to having risen more strongly in recent weeks, semiconductor manufacturers are more vulnerable to changes in demand and risks, so it would look for software and cloud services companies. Gleeson and Riley do see opportunities in semiconductors, because they have the demand of the growing robotic universe; an example of this would be Xilinx.

But these two managers also see opportunities in technological services: some companies related to these activities have transformed their business models to move from being based on licenses to doing so on subscriptions, which has led them to become services in the cloud. And one of the companies in this universe that they like is Zendesk. The manager of GVC Gaesco also gives some names of international firms that provide services in the cloud: the British Iomart or the Dutch Interxion. Also, he likes Cellnex.

Results tracks
The manager of GVC Gaesco has analyzed several results and has drawn conclusions from them. For example, he says that in Alphabet the increase in costs for new developments is high and, therefore, he would prefer companies like Amazon and Microsoft. Meanwhile, it would stay out of Netflix and Facebook. Gleeson and Riley, regarding Apple, comment that they are still positive with their perspectives, given their history overcoming bad times and the strength of their service business.

Peter Choi, of Quality Growth, agrees with the previous ideas: "Although some of the biggest rebounds have occurred in cyclical companies, we believe that companies with structural growth potential can do better in the long term. Amazon and Microsoft are good examples, as they benefit from the information rollover in the cloud, a trend that is in its early stages. " He also likes Alphabet, "since Google is still indispensable in a world where information is increasing".

Predictable business

Javier Ruiz, of Horos AM, affirms that companies such as Alphabet, Baidu (its comparable in China) or Naspers (owner of 31% of Tencent, the leading platform in videogame distribution and owner of Wechat) have a high revaluation potential for the next few years, thanks to its competitive advantages and future revenue growth. Ruiz also explains that he does not invest in companies whose business or industry is not able to visualize for the coming years: "Being such a changing sector, we focus on those companies that have historical leadership positions and created monopoly market situations. by the user himself ».

Carlos Camacho, of Caja Rural, uses as investment criteria the generation of free cash flow, that this movement is high with respect to its capitalization and that, at the same time, they have a policy of remuneration for the growing shareholder. The main positions of the fund he manages are, for him, Apple, Google, Microsoft, Amazon and Samsung.