IBM, eBay and Google are a few tech companies reporting earnings this week, so what’s the outlook for the sector this quarter? Craig Berger, senior semiconductor analyst at FBR Capital Markets, and Mark Demos, portfolio manager at Fifth Third Asset Management, shared their insights.
“We think [earnings are] going to be pretty good,” Demos told CNBC.
“They were beating expectations on the topline and when you have good sequential revenue growth in technology early in the cycle, they give you good operating leverage as well.”
Demos said he expects earnings to be a catalyst for technology stocks this quarter.
“But when you look at expectations in the second half of the year for technology, it’s going to take a pretty good GDP number to meet those expectations,” he said.
“So after this earnings season, you want to be a little more selective in names that expectations aren’t so high, and where you get that is in some of the larger-cap tech names.”
In the meantime, Berger said although tech stocks have been selling on the news over the past week, it’s a good buying opportunity for investors over the next three months.
“The chip stocks offer great fundamentals, revenues are recovering, earnings leverage is very high because a lot of heads have been shed, and the earnings picture looks great,” he said.
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No immediate information was available for Berger or Demos.