Tech stocks have been high-fliers this year, with the Nasdaq (^IXIC) up about 30 percent year to date. But there are growing concerns about whether those stocks have come too far, too fast.
Paul Meeks, Independent Solutions Wealth Management Portfolio Manager, tells Yahoo Finance Live's Seana Smith and Akiko Fujita that he is worried about the valuations of tech stocks. Meeks cites two reasons. First is the AI hype. Meeks notes that a lot of companies spoke about AI on their earnings calls, but analysts didn't adjust their outlooks based on those comments, with the exception of Nvidia (NVDA). The second is interest rates. "Tech and aggressive growth stocks need low interest rates," Meeks said, so the Federal Reserve's "hawkish pause" is a "real incremental negative" to tech stocks.
When it comes to specific stocks, Meeks says the two recent Alphabet (GOOGL) downgrades are "legit," even though he likes the stock long term. Meeks says he is looking for defensive stocks within the tech sector. When it comes to defensive AI plays, Meeks specifically mentions Extreme Networks (EXTR) and AMD (AMD). Meeks also likes Uber Technologies (UBER) which he says is on a "very visible path to profitability," while rival Lyft (LYFT) is "a company that's badly damaged." As far as Tesla (TSLA) is concerned, Meeks says the stock's performance is "a bit worrisome," adding that it can sometimes be hard to value because "it's more a cult."
Meeks is less of a fan of Chinese tech stocks such as JD.com (JD) and Alibaba (BABA) because of the China's weak economic recovery from the Covid pandemic.
Key video moments
00:00:55 Meeks on Alphabet downgrades
00:01:30 Meeks explains why he is concerned about tech valuations
00:03:14 How Meeks is playing AI
00:03:40 Best ways to play AI
00:04:45 What Meeks likes about Uber Technologies
00:05:19 Why Meeks is not a fan of some Chinese stocks
00:06:08 Meeks on Tesla
