Inflation, inflation, inflation. That’s all we seem to hear about these days as the CPI report has become more important than the jobs report and as the Federal Reserve takes the center stage on a monthly basis. The stock market has been hit hard and tech stocks have paid the biggest price.
In fact, the Nasdaq composite has now suffered a peak-to-trough decline of 33% — worse than the 32.1% decline we saw amid the Covid-19 panic.
Most companies are feeling some sort of pressure in their business. Whether it’s supply-chain related for a company like Apple (NASDAQ:AAPL) or ad-related like it is for Snap (NYSE:SNAP). For non-tech businesses, those pressures can be even worse.
However, not every company is feeling the pinch. There are a handful of tech stocks that are navigating this storm quite well, as demand continues to bolster revenue and drive profits. You wouldn’t know if you looked at the stock prices, as they have been buried along with everything else.
But for investors who listen to the conference calls and parse through the financial statements, this reality is clear as day. Let’s look at them now.
Tech Stocks Bucking Inflation: Salesforce (CRM)
Salesforce (NYSE:CRM) reported strong earnings on May 31, which allowed its stock to rally about 10% in the following session. The company delivered a top- and bottom-line beat and grew sales 24% year over year.
Considering that Salesforce also delivered a top- and bottom-line beat and boosted its guidance last quarter, I never felt that the stock deserved to fall 50% from peak to trough. For what it’s worth, guidance was also strong last quarter.
Yet it’s what management said on the conference call that should have everyone’s attention. From Co-CEO Marc Benioff:
I can tell you that our business — you can see this in the Q1 numbers, can’t you, is incredibly healthy…We’re carefully watching the economic data. I know all of you are doing that as well. And so far, we’re just not seeing any material impact from the broader economic world that all of you are in.
Palo Alto Networks (PANW)
I really liked Palo Alto Networks (NASDAQ:PANW) earlier this year, because it was one of the only tech stocks bucking the bear market. Eventually though, it got swallowed up in the sell-off.
While its better-than-expected earnings helped snap it out of its downtrend, it still hasn’t recovered a bulk of its losses. That said, business is still going strong, as revenue grew by 29% year over year.
From CEO Nikesh Arora:
I don’t want to be way too optimistic, but the fact that we were able to tide over that pandemic moment as an industry to be fair in cybersecurity, I’m less worried about it right now given what’s going on in the environment…you’re seeing way more security awareness and concern more than I’ve ever seen.
Elastic N.V. (ESTC)
Lastly, we have Elastic (NASDAQ:ESTC). With its $6.25 billion market capitalization, Elastic is eight times smaller than Palo Alto Networks and just a fraction the size of Salesforce. Yet, that doesn’t mean it’s one of tech stocks we should ignore.
In fact, quite the opposite. On June 1, the company delivered an earnings and revenue beat while the latter grew roughly 35% year over year. Guidance was strong too. Not only are we hearing that business is good from these tech stocks, but we’re also seeing it in the results.
From COO and CFO Janesh Moorjani:
Turning to the outlook for fiscal 2023. We believe our products are core to our customer success, which helps us build a healthy business that performs consistently through both, upswings and downturns. To be clear, we have not seen any broader macroeconomic impact in our business.
— Bret Kenwell
Fed's Stealthy Move Could Crash U.S. Market [sponsor]A new, secretive move being carried out by the Fed that has nothing to do with lowering or raising interest rates... could soon have an enormous impact on your wealth. According to Dan Ferris, the banking expert who once predicted the collapse of Lehman Brothers, "Millions are about to be blindsided." More here.
Source: Investor Place