The tech-heavy Nasdaq Composite (IXIC) started the week in the green as the large-cap tech stocks recovered on Monday. The index, however, is still down about 4% compared to its record high in the last week of April.
Evercore’s Mark Mahaney comments on the tech stocks
Evercore ISI’s senior managing director Mark Mahaney sat with CNBC on Tuesday to share his views on the technology sector. On “Squawk Box”, Mahaney named Amazon as his top pick in tech stocks, Uber as his second pick, and Facebook as his third pick.
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The Evercore executive acknowledged that tech stocks are worth more in a low growth environment or the negative growth environment seen last year but said:
“Caterpillar is growing 30% this year, the same as Amazon. So, you sort of lose the premium that you get out of Amazon. But that’s going to change. We go to 2022, and onwards, Amazon is going to sustain 20% top-line growth. Cyclical stocks won’t. So, in the long run, the best, highest-quality big cap tech stocks will get their premium back.”
Commenting on Amazon Inc’s (NASDAQ: AMZN) effort to acquire MGM Studios for $9 billion, Mahaney highlighted that he holds a bullish stance on the global online streaming industry that already has five major players. So, Amazon spending $9 billion to beef up its content streaming segment, he added, strategically makes sense.
The Amazon-MGM deal could officially be announced later this week
The Amazon-MGM deal that could officially be announced as soon as later this week comes only a few days after Discovery merged with WarnerMedia to create one of the largest Hollywood studios. According to Mahaney:
“This is a sign of just how competitive this space is. The cost of participation in this club is going to rise. You have to be willing to spend probably $10 billion a year in order to be a global streaming company, and I think very few companies can afford to do that beyond the big five players.”
On the contrary, however, Recode senior editor Peter Kafka said on CNBC’s “Tech Check” on Tuesday that Amazon has no desire to compete directly with the likes of Disney and Netflix.
At the time of writing, Amazon shares are up more than 2% year-to-date in the stock market. The U.S. tech giant has a market capitalisation of $1.64 trillion and a price to earnings ratio of 62.04.