As earnings season unfolds and several mega-cap tech stocks, including members of the "Magnificent Seven," have reported, the overall market and tech sector have seen significant declines in recent weeks. The XLK technology sector ETF has dropped nearly 6% this month and is now down over 10% from its recent 52-week highs. Similarly, the broader market, represented by the SPY ETF, is down nearly 5% from its 52-week high and over 2.5% this week.
Several well-known tech stocks have experienced sharp declines in this environment, making headlines. Specifically, CrowdStrike (NASDAQ: CRWD), Advanced Micro Devices (NASDAQ: AMD), and HubSpot (NASDAQ: HUBS) have all seen their share prices drop close to or over 30% from their 52-week highs. Given this rapid selloff, is it time to consider buying shares of these companies on the dip?
Advanced Micro Devices
AMD's stock has sharply declined, falling nearly 40% from its 52-week high and down over 6% year-to-date. This decline comes amidst concerns that the Biden administration may impose stricter regulations on products imported from overseas that use American technology. While such export controls could impact sales in the short term, they are unlikely to dampen the growing demand for advanced chips, particularly those used in data centers and artificial intelligence (AI) model training—a lucrative market for AMD.
Over the past year, analysts have significantly raised their earnings forecasts for AMD, highlighting the company's strong growth prospects. AMD's data center revenue is a crucial driver, having surged 80% year-over-year in the latest quarter. Advanced Micro Devices (AMD) is set to release its next quarterly earnings report on Tuesday, July 30th, 2024. The consensus forecast for this quarter's earnings per share (EPS) is $0.47, up from $0.40 reported for the same quarter last year. Currently, the stock has a Moderate Buy rating based on twenty-nine ratings, with a consensus price target of $194.97, forecasting a whopping 41% upside.
HubSpot, Inc.
HubSpot, a $25 billion company, provides a cloud-based customer relationship management (CRM) platform for businesses across the Americas, Europe, and the Asia Pacific. The stock fell sharply after Google parent Alphabet walked away from acquisition talks, causing HUBS to drop 28% from its 52-week high and nearly 15% for the month.
Despite the setback, this dip could present a buying opportunity for a company with a strong track record of steady revenue growth and a growing global customer base of over 215,000 small to medium-sized businesses. While enterprise software spending faces challenges due to economic uncertainties, HubSpot's revenue grew 23% year over year last quarter, showcasing its resilience. The company reported earnings on May 8th, 2024, posting $0.01 EPS, significantly beating the consensus estimate of ($0.26) by $0.27, with revenue of $617.41 million, exceeding expectations of $597.12 million. HubSpot is scheduled to release its following earnings report on August 7th.
CrowdStrike Holdings
CrowdStrike Holdings, a $61 billion cybersecurity giant specializing in cloud-native endpoint protection, has recently faced a significant drop in its stock price. The company has seen its value plummet over 35% from its 52-week high and 34% this month alone. This sharp decline is primarily due to a faulty update to its Falcon platform, causing a global IT outage that affected a wide range of critical sectors, including banks, airports, hospitals, retailers, businesses, and government agencies. The incident has led to considerable disruption and raised questions about CrowdStrike's reliability and prospects.
Despite the recent setback, CrowdStrike's core business remains strong, with projected earnings growth of 55% for the year. In its latest earnings report on June 4th, 2024, CrowdStrike reported an EPS of $0.20, just shy of the $0.21 consensus, with revenue of $921.04 million surpassing expectations. The company has shown impressive annual sales growth of 66.22% over the past five years, with a 33% increase in quarterly sales compared to the previous quarter. However, the fallout from the Falcon update incident has created uncertainty, making CrowdStrike a potentially volatile investment. Despite recent challenges, this dip-buy opportunity may appeal to those with a higher risk appetite who are confident in the company's long-term prospects.
