Hello all, welcome back to Tech Tune Up with me, Paul Meeks, brought to all of you by our friends at Benzinga. And what we try to do in this show, as you know, if you’ve been watching along, is I start by reviewing some of the key tech sector news of the week, not just to rehash it, but to tell you what it means much more broadly. So first of all, let’s get right at it, like we always do.

First stock I’d like to talk about is Palantir. I brought this up on the show a couple of weeks ago, a stock that I’m actually bearish on. As you may recall, this is a data analytics company for the spies, folks like the US Army and the CIA.

It is managed by a wild man by the name of Alex Karp, he’s the CEO, and he says the most outlandish things. And I will tell you this, from covering stocks for a long period of time, when CEOs are uber-promotional, what they typically do is over-promise and then under-deliver and their stocks get whacked. And this guy is one of those guys.

So this stock popped about a week ago when they announced a follow-on US Army contract. But then the short sellers like me got ahold of it and started driving the stock down. And what Alex Karp said to the audience on CNBC the other day he was blaming the short sellers for their cocaine use, which is the reason the stock went down.

Outlandish, super weird, super unnecessary. And that’s CEO Alex Karp over at Palantir, stay away from that stock. The next thing I’d like to talk about is Bitcoin.

And there are other folks on Benzinga better fundamentally with Bitcoin than me. But of course it has raged on, it’s getting whacked today. I have a lot of people ask me, what’s the best way to invest? Now, first of all, it’s a speculation, not an investment.

So I’d keep your slice of the asset allocation pie very small, maybe even tiny. And I would of course go with a Bitcoin ETF instead of buying the coin or maybe even trying to invest in it through a company like MicroStrategy, ticker M-S-T-R, which at one time was an enterprise software and services company. And now it’s essentially morphed into a Bitcoin hedge fund.

But in the ETF space, the biggest and most popular ETF is the grayscale ETF. The problem with that is, ETFs are supposed to have low management fees. And this particular ETF has a 1.5% management fee.

And so when I see that, I steer you immediately to the other Bitcoin ETFs, some of them that have management fees as low as 30 basis points or 0.3%. So M-S-T-R is another stock I’m very worried about. And this company recently, and remember it’s supposed to be a tech company, supposed to be a software company, but all they do is trade Bitcoin. And they are raising from the outside markets a half a billion dollars to buy more Bitcoin.

So be wary, because when you see that, that might be marking a top in the Bitcoin market. The biggest story of the week, and the next thing I wanna talk about is TikTok. Now TikTok, as you may know, is controlled by a Chinese company called ByteDance.

Now it is uber popular here in the United States. It has 170 million users. And remember our total population in the States is only 340 million.

And so, as you may have heard, last week to the House of Representatives, and they voted overwhelmingly to force ByteDance to divest TikTok or else TikTok will not be able to operate in the US. It’s actually a very aggressive measure with a very big Chinese property. They’re accusing the firm of essentially taking people’s data and it’s a national security risk.

Frankly, I kind of doubt it. But anyway, it is a major change in the relations between the US and China. What happens next is we go to the US Senate, where I think if it passes, it won’t pass by much, and it may not pass.

And President Biden says if it gets to his desk, he’s signing it. Think about it. You’re forcing the divestiture of a company that has 170 million users in these United States.

So wow, if that’s not a tell, I don’t know what is. That is super important. Next I’d like to talk about is one of the best known tech companies in the US.

It’s a company called Oracle, Enterprise Resource Planning Software Company. It’s been around forever. Actually had an IPO in 1986.

And here’s another company that I’m very worried about. And I probably would get ready to sell it or short it into its recent strength. Because this week the stock went up 12% on its quarterly earnings, but I thought a lot of that was fluff.

And I’m not sure that this company in the future with AI or not will grow much faster than 5% revenues and 10% earnings per share. And yes, they will have a AI driver. I don’t think they will lead the AI revolution.

In the meantime, the stock is going up with the AI tide lifts all boats. But I’ve covered this for a long time. Another very controversial, very boisterous CEO or now chairman by the name of Larry Ellison.

Why would he, and he’s one of the world’s wealthiest people, go on these quarterly conference calls with Wall Street analysts and sell his company like he needs a commission to pay this month’s rent? It’s very weird. And when you see that quite often the CEOs are trying to hide something. Next stock we’ll talk about today is IBM.

I think IBM is kind of interesting, but of course this is the oldest school of all old school tech companies. And they announced late last year, late in 2023, that they were going to fire 8,000 people and replace them with AI automation. So they said that last fall, that rattled some cages.

And to put this in perspective, IBM has a total workforce of about 220,000. But then just recently, this past week, they followed up with an announcement that they are starting to fire those people. Now, they didn’t give a number about how many folks are gonna be replaced by AI automation.

Is it what they were talking about last fall? But anyway, they’re backing it up and they’re slashing employees. And that tells you that, wow, a company like that, embracing this trend to lower its costs, it’s a big deal. I don’t wanna be one of those 8,000 people that might lose his or her jobs.

Next, some people would be surprised I talk about Boeing, but Boeing is near and dear to my heart because I live in Charleston, South Carolina, and this is where we build the 787 Dreamliner. And if you follow the news, you know that this company has one manufacturing stumble after another, and this company was a US manufacturing and technology icon, and now it’s all blown up. And when this stock was riding high, one of the theses that had the stock propelled was that not only were they gonna sell planes, but they were also gonna follow on with technology services.

It would have kind of a recurring revenue software model that Wall Street analysts love. This is very sad that this great American company now can’t manufacture things of quality. Keep your fingers crossed.

There are probably gonna be changes there, but man, I think it’s just super sad. Next, next week, a company is coming public called Reddit. And Reddit is a social media company.

Think of another Meta or Google. And the stock is getting a lot of hype. This always happens before IPOs because the investment bankers like to hype up the IPO.

So A, it’s successful, and B, they get a bigger share of the IPO through their investment banking fee. I would stay away from this IPO because when it comes to digital advertising, which is the business model used by these social media companies, it is game over. It’s been game over for a long time.

All the spoils go to Meta and Google. So I don’t think they’re gonna be a player, just like Snap or Pinterest were never players in social media with digital advertising. Now, they’ll talk about a business model in which they’re going to license their data to other folks that are gonna use it to build their large language models for AI, okay? Right, we’ll have some of that.

But unless that becomes your driver, this is not a good business for anybody but Meta and Google. And I would ask you to stay away from that IPO. Do not invest in it, even if you have a chance.

Next, the meltdown in electric vehicles continues. And I’ve called it here many times. The latest, and I don’t wanna say greatest because it’s horrible news, is the US play Fisker bankrupt.

Another one bites the dust. Of course, I’ve also poo-pooed Tesla over time on Benzinga. And that stock has done exactly as I thought.

It has plunged. And if Tesla does not hold $160 a share, I’m looking at the price chart right now, that stock is gonna go to 100. And this is a stock that’s already down about 2 3rds since it’s high a couple years ago.

I actually think it can go even lower from 160 if it doesn’t hold on the price chart all the way down to 100. That would be another 40%-ish lost. Next, kind of a whole blast from the past.

Remember the meme stocks of 2022 and how they were all broadcasted about and traded through Robinhood? That company has been a dog, no surprise, but actually had a quarter better than Wall Street expectations. The stock has risen in sympathy. And remember, when it comes to valuing securities, if you’re an analyst or a portfolio manager like me, it’s not what the company does for revenue or earnings per share.

It’s what the company does versus analyst expectations. And they had a low bar here and they stepped over a low bar, but the stock is up. Do not think that this company is back.

Sell into strength. And the next two, unfortunately, bad news bears on the tech list this week is Adobe. Now, Adobe is one of America’s foremost software companies, very large market cap, supposed to have an AI driver just like everybody else has been touting.

But Adobe announced their quarterly results last night. And what they announced wasn’t too shabby, but their guidance was way below the street. Stock’s getting hit today, down 15%.

And this is another one of the companies that I’ve been warning you about that is talking about these AI apps. But when they release them, they don’t seem to generate a lot of revenue. Nobody seems to care.

And so again, I’ve said many times, if you invest in AI, and I think you should, concentrate on the infrastructure players, the semiconductor companies. Those chips are helping build these large language models. These chips will be used for the next era of AI, which is inference, which is where we take data from the models.

Let me try to make some sense of them. But that is NVIDIA, that is AMD, that is Supermicro, all stocks that I’ve promoted here and all have done great. Adobe was once a American iconic software company.

And I’m saying, AI or not, where’s the growth? Obviously, people, when they reported last night, were very disturbed by the result and the forward-looking guidance, as was me. And the next is kind of a tell. Everybody knows about Adobe, but this morning, before the open, Jabil announced their quarterly results.

Now, Jabil is a contract manufacturer. So they take others’ designs and build the stuff, build the hardware. It’s a company based in Florida, far away from Silicon Valley.

And until they made a recent divestiture of their mobility business, they counted Apple for many, many years as their largest 20% customer. They’re a very well-managed company. I’ve covered these guys for decades.

But they also had a very poor guidance for the next quarter in this year. And so we’re seeing a real bifurcation in technology. The haves, which we’ve highlighted here, they’ve been great.

And the have-nots, which I’ve told you quite often to short, which have gone through the floor, also good calls. But anyway, those are my stocks and stock tells of the week. Next, we’re gonna go to my Meeks Favorites list.

Back with you. A couple of tweaks here. Nothing too significant.

I continue to like one and one company only in the cybersecurity industry within tech, and that’s CrowdStrike. In the last week or so, Palo Alto Networks and SentinelOne, which are other companies in this space, had awful quarters and their stocks got whacked. So is there a overall industry problem? Or is CrowdStrike my pick just so much better than everybody else? Because in the same space where everybody’s whining about the customer slowing down spending, they kicked ass.

They reported the results, the stock went straight up. So anyway, I’m gonna stick with CrowdStrike. It’s been a great call.

This is very interesting. And it’s gonna be a tell for the entire tech market. Next week, next Wednesday, Micron, ticker symbol MU, announces their results.

I think they’re gonna hand the lead upside, and they’re gonna probably talk about a nice inflection in their business. And that’s important because they make memory chips, and memory chips will be used in AI systems. In fact, AI systems will have a voracious demand for these chips.

Let’s see what they say. But I would buy this stock ahead of next week’s quarter. I think the stock over time can go from right now, it’s trading in the high 90s, probably at the peak of the next cycle over the next couple of years, 150.

So of course I own it. Next, no change here, T-Mobile, followed by Microsoft. Microsoft and Nvidia got to be in your tech portfolio because as of now, they are leading the AI revolution.

Meta, I like Meta a lot. I do not like Google. Google is still held in my fund, but fresh money buy, I’d only buy Meta.

Like Amazon, like Synopsys, S-N-P-S, which is a electronic design automation software company. They have software that semiconductor engineers use to design chips. Then there’s the AI standard bearer, Nvidia.

I like Nice, which is the call center company. I like IAC for its sum of the parts value. I like, and I think this is actually a timely trade today.

I very much like Broadcom. Broadcom is a hybrid, like a half semiconductor, half software company, ticker symbol A-V-G-O. If Broadcom comes in anymore, right now the stock’s trading at $1,239 a share.

If it successfully tests its 50 day moving average price, which is 1,233, so essentially right there. And if we can find some stability there, it is a good opportunity on this dip. And it has had a dip ever since it announced its quarter about a week ago, which I actually thought was fine.

I think it’s a buying opportunity. My last two is, I was in Mercado Libre, which is the Latin American version of Amazon. And then I was out.

And that was a good call because the stock is deteriorated further, but just purely on evaluation basis, I’m taking and I’m adding back to the tech favorites list, Mercado Libre, ticker symbol M-E-L-I. And the last one, and this is a stock that’s been touted by JP Morgan analysts this week. It’s a company called Duolingo.

It helps you learn foreign languages with China being the key language, but they’re in all the different languages. But I actually think that usually when a Wall Street analyst who is driven by investment banking bias touts a stock like JP Morgan did earlier this week with D-U-O-L, then I run in the other direction. Sometimes I even short those stocks because they’re hyped.

But anyway, I’ve done my own homework and I think Duolingo, even with the initiation of coverage, big price target. I think JP Morgan had a price target of 270. I actually think there’s really something there.

So that’s my tech list or what I call my fresh money buy list. I run a tech model, no surprise. That’s the only thing I’ve been doing for the last couple of years for these guys behind me, Harvest Portfolio Management.

Just check us out online. Let me know if you wanna do some work. And the last thing I wanna do is just hit a couple of key tech trends.

As I’ve told you before, when valuing tech companies and other aggressive growth stocks, it’s 20% fundamentals, 80% interest rates. And so yes, I’m following US rates very carefully. And this week we had reports for the Consumer Price Index and also the Producer Price Index.

These are two inflation measures. The first one is for retail investors. Second one is for wholesale inflation.

And remember, in this country, interest rates are high and have been raised very aggressively by our central bank, the Federal Reserve Board, ever since March of 22. Now they have plateaued. They raised interest rates over that cycle 11 times from essentially zero to about 5.5% where they stand today.

And everybody is waiting. And I’m waiting because I’ll get more bullish on tech stocks when interest rates start to fall. Because when interest rates fall, tech stocks go up, vice versa.

So they’ve had this headwind. When they pivot over at the Fed, we’ll have what we call loose monetary policy, accommodative monetary policy. Interest rates will start to fall and they’ll probably fall pretty consistently for a year or two.

And at that point, we should probably continue because it has been a bull market in tech stocks. However, these two inflation measures that I mentioned were reported this week and they showed that inflation is still in this country, stubbornly high, very sticky. And so unfortunately, because this would be a problem for tech stocks, I think our central bank is gonna push into much later this year, lowering rates.

And when they start to lower rates, I don’t know how steeply they’re gonna do that. So unfortunately guys, when it comes to tech investors, if you delay this pivot from high rates to low rates, that’s gonna be another wind in our face. Stay tuned.

The EV market, I’ve talked about this before, a lot of nastiness. Tesla has imploded. I actually think even though it’s down two thirds, it’s gonna go down another 30, 40%.

The bloom is off the rose. Whether you’re a US vendor or a foreign vendor, they’re all dropping prices significantly to stoke demand. But even as they’ve done that, they haven’t stoked any incremental demand.

Their costs are high. They’re burning cash. This week, Fisker announced a bankruptcy.

Rivian is a stock that had a beat of very low expectations. So the stock has risen in response. Here’s another one, guys.

Take Rivian with a stock up on this quarterly announcement buzz, which I think was bullshit, sell into strength. Sell into strength, maybe even short it, because the bloom is off the EV rose, my friends. The next is I’m really worried about how not just the US government, but foreign governments are really tightening the screws on my tech companies.

And as I highlighted earlier, this whole mess that has gone to the House of Representatives and next to the Senate about potentially banning TikTok in the US, unless its Chinese owner divest the business to a US company, some of you who are conservative may think that’s the greatest thing. I don’t think it’s a good thing because this is emblematic of a real squeeze on my sector and it’s gonna be problematic. Then of course, here in the United States, we have been running our internet business based on legislation that has not been refreshed since 1996.

It’s called Section 230. And in the meantime, because we have a leadership vacuum in the States with internet legislation, it has been filled the void by the European Union. So the European Union is legislating all these things, including privacy measures, which very much impact our tech companies and it’s coming from abroad.

It’s not coming from the United States. And of course, all these things were created in Silicon Valley, California, very worrisome. And the last thing I wanna say is I have covered tech exclusively since 1992.

That’s all I do 24 seven, invest in tech, talk about tech, write about tech. But I tell you that in my dealings, I have other journalists and analysts and portfolio managers in the tech sector like me and I give them credit once credit’s due. A couple of weeks ago, I talked about Eric Savitz over at Barron’s, he’s great.

There’s another guy by the name of Tiernan Ray, who’s probably on my dream team. And then there is a very established and probably the leader in reporting on all things digital. And her name is Kara Swisher.

And she just published a book called The Burn Book. Burning, unfortunately, quite a few tech CEOs, but I will tell you, it is definitely worth the read. Gives you some insight into her relations with a lot of leaders of a lot of Silicon Valley companies.

So check out Kara Swisher’s Burn Book. I just put it down, great and helpful. And I always give credit where credit’s due to some of my colleagues.

So with that, that is this week’s edition of Tech Trends with Paul Meeks. Please check me out. I can’t always get to my questions when I’m doing this broadcast.

So find me at harvestportfoliomanagement.com. They can find me over at Benzinga, reach out. And even if I can’t answer your questions live, I promise I will answer them via email. So stay tuned, everybody.

Stay right here. We’ve had some awesome picks on both the long side and the short side in tech, and we’ll see you next week. All right.

Have a good one. We’ll see you next time. Thanks again.

I’m Paul Meeks. Have a great week. Bye-bye.