XNTK - Neuberger's Daniel Flex sees growth potential in Google Amazon Meta and Apple

2023-03-21 14:06:55 ET

With a bullish stance on the FAANG stocks, Daniel Flax, Neuberger Berman senior research analyst, predicted Tuesday the markets will be focused on the innovation and growth potential of Google ( NASDAQ: GOOG ) ( NASDAQ: GOOGL ), Amazon ( NASDAQ: AMZN ), Meta ( NASDAQ: META ) and Apple ( NASDAQ: AAPL ) later this year and into next year.

Speaking to CNBC, Flax projected that free cash flow and earnings growth will improve over the next year for Amazon, citing its latest step in managing costs . Earlier this week, the online retailing giant announced another round of layoffs, this time involving the elimination of 9K positions .

Describing the upside potential for each tech giant, Daniel Flax commented:

• "We like Google at current levels. I think Google's search business is durable, sure it's seeing cyclical headwinds and I think they have an underappreciated opportunity in their Cloud business."
• "Amazon ... I think e-commerce will continue to become more important to buyers and of course to third-party sellers. Really it's about empowering small and medium businesses. We continue to like Amazon's growth prospects in Cloud even as it too is facing some cyclical pressures."
• "Facebook or Meta remains important to customers and to advertisers. They're transitioning their business and we're seeing traction in Reels and we're continuing to watch that closely."
• "Apple ... where they see some pressure in parts of their business, which of course are consumer facing, but I think the product cycles are healthy, the install base in iPhone is growing and I think the services business remains robust so I want to go through the opportunity."

Asked about mounting ChatGPT pressure on Google, Flax said that although the potential of ChatGPT is being recognized across many different industries, Google has a lot of intellectual property around generative AI, but it is important to manage data carefully and deliver a robust service.

Flax believes that Google has the capabilities to roll out a lot of that in the coming weeks, months and years. Earlier on Tuesday, Google ( GOOG ) ( GOOGL ) released its AI chatbot , Bard, for public use.

Looking at the intraday movement of the mentioned technology stocks: AAPL +0.6% , META +1.3% , GOOG +3% , AMZN +1.9% .

Tracking intraday movement of tech-focused ETFs : XLK +0.2% , VGT +0.5% , IYW +0.69% , ARKK +5% , FTEC +0.5% and IGM +0.95% , SKYY +2.1%, XNTK +1% and QQQ +0.92% .

For another perspective, see why Seeking Alpha contributor Best Anchor Stocks says, " Why Amazon's Financials And Valuation Are Misleading ."

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