Despite its recent pullback, one social media stock tops everything else out there, Dan Niles, senior portfolio manager at AlphaOne said Thursday on CNBC.
That stock is Facebook. Niles said that he thought sellers of Facebook would look back and think, "You know, we shouldn't have sold this. It's going down with everything else," he said. "The easiest way to think about it is: They're going to develop another billion-dollar business in video advertising. They make about $100 million today. That's going to ramp up over the course of this year. I think it's going to be as big for them as mobile is. That's my favorite stock, bar none, right now."
"Right now, the way that old tech and the hypergrowth names are moving have nothing to do with the individual company fundamentals," he said. "And to some extent, that was the same case last year."
On "Halftime Report," Niles noted that Facebook's revenues had beaten estimates every quarter last year, while Amazon and Google missed three out of four quarters, "and the stock is still up 60 percent," he said. "And so it didn't really matter."
The recent decline was because of hedge funds and mutual funds trimming their exposure to those companies, Niles said. "You're seeing those trades unwind."
Niles sounded positive on Microsoft, a stock in which he holds no position.
"I would say Microsoft is better positioned now than it's been in a very long time, and I think a lot of it does have to do with (CEO Satya) Nadella," he said.
But the company's purchase of Nokia will likely take a toll, Niles added.
"I think that business is going to be an absolute train wreck over a longer period of time, and estimates because of that need to move down," he said. "That's going to be balanced by the fact that they're going to get some more revenues from selling applications to the entire universe of Android and Apple devices."
Niles also said that he was going to short "some IBM today."
"The move to the cloud is deflationary for IBM," he said. "IBM's missed four quarters in a row. They've missed nine of the last 10 quarters on the top line. This isn't going to get better for them."
Niles added that there was nothing wrong with IBM other than its size and its exposure to emerging markets.
"IBM's stuck because it has a lot of emerging markets exposure," he said.
Niles has positions in Yahoo and Facebook and said he was planning to take a short position in IBM.