Investors are triggering a recession outlook, with many saying the Fed’s decision to keep interest rates higher for longer, coupled with growing unemployment – figures showed unemployment rose to 4.3% in July, the highest in three years – and slower economic activity will begin to reveal serious cracks in the U.S. economy.
Need to Know News
- Recession fears have sparked a tech sell-off.
- Big-tech stocks are down against weaker trading volumes.
- Seeking alternative tech stocks could provide stability.
- Also: Discover the next NVIDIA
As investors off-load on big tech stocks, sparking a wider sell-off for AI stocks, seeking alternative options could help provide more stability as market conditions continue to dwindle in light of recent economic developments.
Alibaba
Chinese e-commerce giant Alibaba (NYSE: BABA) might’ve dropped off investors’ radar in recent months following internal management problems, growing regulatory concerns, and ongoing tension between Chinese companies and Western economies, primarily led by the United States.
However, things are in a turnaround stage for the company which dominates roughly 45% of the Chinese online shipping market. For starters, the company’s new CEO Eddi Wu has introduced a plan to put customers at the center instead of merchants, which in the long run could bolster consumer support.
Quarterly and fiscal 2024 results showed that the company delivered strong revenue growth of 7% year-over-year (YoY), or $30.72 billion. BABA has moved sideways this year, with stocks down 0.23% year-to-date (YTD), with some momentum during recent months as the company looks to present a positive turnaround plan.
GoDaddy
Arizona-based web hosting company GoDaddy (NYSE: GDDY) continues to uphold its track record of maintaining compounding free cash flow and a strong balance sheet. GoDaddy has taken a similar route to other tech companies by focusing its capital allocation strategy on developing artificial intelligence technology that can seamlessly be integrated with existing digital infrastructure.
For the second quarter, the company reported $1.1 billion in total revenue, an improvement of 7% compared to last year. Total net income rose by 76% YoY to $146.3 million, representing a 13% margin. Additionally, GoDaddy reported a strong free cash flow of $323.4 million, an improvement of 35% YoY.
GDDY shares have soared by more than 46% since the start of the year with 13 analysts giving the stock a “Strong Buy” rating.
Oracle
For roughly 47 years, Oracle (NYSE: ORCL) has been developing enterprise-based information technology solutions. The recent explosion of artificial intelligence means that Oracle is in a position to lead generative AI solutions, and currently provides cloud, database, and enterprise-centric software solutions to 98% of Fortune companies.
For Q4 2024, Oracle reported a total revenue of $14.3 billion, an improvement of 3% and 4% in constant currency. Revenue for cloud-based services, including infrastructure and applications rose 42% and 10%, respectively, with Q4 cloud revenue up 20% to $5.3 billion. Full-year 2024 total revenue came in at $53 billion, which was up 6% compared to the same period last year.
ORCL has maintained a steady performance on the stock market, with share performance improving 22% since the start of the year.
Super Micro Computer
Supermicro (NASDAQ: SMCI) might be caught up in the recent stock market carnage, but some analysts still see the potential for this tech alternative. The company is a provider of computing and storage solutions, including networking and green computing technologies.
The California-based company has seen rapid expansion over recent years, with key service areas – 5G technology, AI cloud, and storage – witnessing the fastest growth. In Q3 2024, the company reported total net sales of $3.85 billion, a steady improvement compared to $3.66 billion in Q2, and $1.28 billion in Q3 2023.
The broader tech sell-off has seen share performance stagnate in recent weeks, however, SMCI is up by 107% YTD. Shares are currently rated at a “Moderate Buy” with some analysts calling a Hold on SMCI until market conditions have stabilized.
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