Tech investor Paul Meeks says avoid this FAANG stock, picks the ones he can 'stomach'

Published Thu, May 26 20228:35 PM EDT

Tech investor Paul Meeks identified the FAANG stock he would currently stay away from despite the recent rout in the broader sector, saying parts of the company's business "could be in some trouble." That company is e-commerce giant Amazon , whose shares have dropped more than 30% so far this year, as of the Thursday close. "In the United States, e-commerce revenues have slowed down as an industry and right during the same time over the last couple of years, Amazon has added 800,000 employees," Meeks, portfolio manager at Independent Solutions Wealth Management, told CNBC's "Street Signs Asia" on Thursday. "I would stay away from that stock because huge expense ramp and revenues are slowing down," he said. "The greatest thing for that company is Amazon Web Services. That is fine but man, I really think the e-commerce business could be in some trouble." In late April, Amazon issued revenue forecast that fell short of analysts' estimates and reported its slowest quarterly growth rate since 2001's dot-com bust. Among Big Tech, Meeks sees Apple , Google-parent Alphabet and Microsoft as the only ones he "can really stomach right now." Independent Solutions Wealth Management owns shares in those firms. While shares of Facebook-parent Meta Platforms might have dropped more than 40% so far this year and look attractive at current levels, Meeks expressed skepticism over the company's future due to disruption in the digital advertising industry. Advertising makes up the lion's share of Meta's revenue at more than 95%, according to the firm's latest earnings report. Shares of social media companies and digital ad firms tumbled Tuesday after Snap warned investors that it won't meet its previous targets for revenue and adjusted earnings in the current quarter. "The interesting thing about that whole space, those digital advertising models … won't say they're permanently impaired but they have been disrupted," he said. "I don't know what Meta's business model is going to be in the future. Huge expenditures for the metaverse, and I don't even know if they know what that is." Meta's Reality Labs, the part of the firm trying to build products for the metaverse, lost close to $3 billion in the first quarter . In February, Meta's CFO said during an earnings call he expects operating losses to "increase meaningfully" in 2022. Bullish on cybersecurity Elsewhere in the tech sector, Meeks said cybersecurity is an industry that could "accelerate its growth" despite geopolitical headwinds. The investor said he likes Palo Alto Networks , which recently lifted its full-year forecast after announcing fiscal third-quarter results that bested analyst expectations. "I expect more greatness from this company," Meeks said. "This company is not particularly cheap, but I have great comfort that they'll be able to continue their growth and last quarter, they grew 40%."

Portfolio manager picks tech stocks investors should buy and those to stay away from

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Tech investor picks stocks investors should buy and those to stay away from

Street Signs Asia

Tech investor Paul Meeks identified the FAANG stock he would currently stay away from despite the recent rout in the broader sector, saying parts of the company's business "could be in some trouble."