Fundstrat Global Advisors’ Tom Lee believes the latest tech sell-off is a buying opportunity for FAANG names that are on the verge of value prices.
“As you know investing isn’t really about trying to make money every month, but it is about trying to find the big swings and I think we’re at a point where it’s a big swing to own FAANG,” Lee said on CNBC’s “TechCheck” on Wednesday.
The comments from Lee come amid a big earnings week for tech companies and a tech-led sell-off, in which the Nasdaq tumbled nearly 4% on Tuesday and hit its lowest level since 2020. Earlier this week, Lee also said in a note that the FAANG names are “acting like death” and looking like value stocks.
Netflix reported earnings earlier this month when it shared a shocking subscriber loss which led its stock to plummet more than 35% while Alphabet shared weaker-than-expected earnings on Tuesday. Meta will report earnings after the bell Wednesday, with Apple and Amazon set for Thursday, rounding out the FAANG acronym.
Watch CNBC’s full interview with Fundstrat’s Tom Lee “When a company misses it’s pretty hard to buy for the next two quarters, so I think FAANG is in that penalty box,” Lee said. “But for long-term investors, these are, in our view, pretty great entry points especially … because on a macro basis if people are worried about growth these companies are still going to grow double digits.”
Lee added that research and development are a big component of operating expenses among FAANG stocks which could help the names extend their future leads. Plus, many FAANG names are at the forefront of the ever-expanding artificial intelligence industry, he said.
Many investors have staved off growth sectors like technology, searching for safe-haven and defensive areas like utilities and consumer staples as consumers get hit with inflation and Fed rate hikes loom. “I don’t think there’s a lack of future growth catalysts,” Lee said, referring to the FAANG names.