As an investor, tech stocks have been an appealing choice over the last year as excitement about products such as generative AI pushed the sector higher. But not all are winners. Tech stocks that are not performing well or facing challenges, knowing when to sell can be even more critical.
Rather than holding on and hoping for a turnaround, it’s a better strategy to use the Portfolio Grader as a guide to help identify tech stocks to sell.
Underperforming tech stocks can be a real drain on your portfolio, dragging down your overall returns and keeping you from capitalizing on more promising stocks. The market is full of A-rated tech stocks, so why would you hold on to an underperformer?
If a stock is consistently underperforming or facing fundamental issues, it may be a sign that it is unlikely to recover soon. Holding onto such stocks, hoping for a turnaround, can lead to further losses.
The Portfolio Grader’s easy-to-use format makes it a breeze to identify tech stocks to sell. The Grader ranks every stock based on its earnings performance, growth, analyst sentiment, momentum and other factors to determine a letter grade of “A” through “F.”
By using the Portfolio Grader to help you identify tech stocks to sell, you can make some changes and keep your positive returns coming – and give you a better chance to meet your long-term investing goals.
Apple (AAPL)
Apple (NASDAQ:AAPL) has long been a bellwether company that drove the tech community. With a market capitalization of $2.6 billion, Apple ranks as the No. 2 company in the world by market cap.
It’s obviously an important company and you should be keeping a close eye on it. But it’s also been a disappointment to investors – and there are hazards looming ahead.
Sales are falling in China, where the smartphone maker faces new competition from Huawei and its 5G phone. Regulators in the U.S. and U.K. are also deep into investigations that Apple uses the App Store to stymie competition – and that could have a huge impact on Apple’s bottom line moving forward.
While Apple continues to see solid growth from its Services segment, product growth was flat in the first quarter of fiscal 2024. When Apple reports Q2 earnings on May 2, investors should be looking at those numbers closely. But I’m not expecting a turnaround.
AAPL stock is down 11% in 2024. It gets a “D” rating in the Portfolio Grader.
Baidu (BIDU)
Baidu (NASDAQ:BIDU) is a Chinese technology company that has a dominant share in China’s search engine market.
The company is positioning itself as an artificial intelligence company by offering a full AI stack that includes AI chips, a deep learning framework, natural language processing, speech recognition and augmented reality. Its Baidu Brain AI technology engine is used to help develop new AI businesses.
But for all of its innovation and its embrace of AI, Baidu doesn’t perform as well as it should – and people are noticing. Earnings for the fourth quarter included revenue growth of just 6%, to 34.95 billion yuan ($4.92 billion). That was below analysts’ consensus estimates of 34.97 billion yuan.
In addition, Baidu reported monthly average users of 667 million, which was only a 3% increase from a year ago.
BIDU stock is down 13% this year. It gets a “D” rating in the Portfolio Grader.
Block (SQ)
Formerly known as Square, Block (NYSE:SQ) is a technology computer software company that’s best known for the plastic dongles that insert into a smartphone or tablet, allowing small market vendor to process credit card transactions.
Block also performs a crypto company and has a sizable investment in Bitcoin (BTC-USD), owning more than 8,000 of the digital currency at a valuation of more than $450 million. The recent rise in Bitcoin was a major factor in the company’s fourth-quarter earnings, in which Block reported $562 million in earnings – and $207 million of that was from Bitcoin.
However, there are issues that keeps Block’s rating in the Portfolio Grader down. The company isn’t consistent with profits – it posted a net loss in 202 of $541 million. The only reason it broke into the black in 2023 (with income of $9.8 million) was because it had an uncommonly strong fourth quarter.
While analysts are expecting operating income of $1.1 billion this year, I’m not fully sold that Block will be able to find the consistency it needs to be a top tech stock. And if the price of Bitcoin falters again – SQ stock will fall along with it.
SQ stock is down 5% this year and gets a “D” rating in the Portfolio Grader.
Sea Limited (SE)
Sea Limited (NYSE:SE) is a computer software and internet company based in Singapore. The company is best known for its Free Fire game, which is a free-to-play battle royale game much like Fortnite.
It also operates an e-commerce segment called Shopee that operates in Southeast Asia and Brazil. And while the combination of a gaming company/e-commerce platform worked during the Covid-19 pandemic, both companies suffered some growing pains when COVID lockdowns ended.
Earnings for the fourth quarter were $3.6 billion, up 4.8% from a year ago – which is OK, but not great for a technology company in today’s market. Profits of $1.5 billion were down from $1.7 billion a year ago.
The company also posted a net loss of $111.6 million, which was a change from a profit of $422.8 million in the fourth quarter of 2022.
SE stock is up big this year, but note that its stock price is still down 17% over the last 12 months and is still 82% from its pandemic highs. It gets a “D” rating in the Portfolio Grader.
Bilibili (BILI)
Bilibili (NASDAQ:BILI) is a video sharing website that operates only in China. That means if you are wanting to check it out from the U.S. or elsewhere, you’d have to use a VPN service to get to the Bilibili site.
Users are able to post videos and comment on others – it’s essentially like YouTube. But YouTube has a much bigger audience and is much more accessible, which makes Bilibili a questionable investment at best.
The company has 336 million monthly active users and 100 million daily active users. YouTube has 2.49 billion monthly active users.
Earnings for the fourth quarter were $894.3 million, up 3% from a year ago. The company posted a net loss of $182.6 million for the quarter.
While Bilibili is showing some modest growth, it’s a relatively weak stock in the technology sector. If you are looking for a tech investment, you can surely do better.
BILI stock remains down 37% in the last 12 months, and has only gained 3% in 2024. It gets a “D” rating in the Portfolio Grader.
MaxLinear (MXL)
MaxLinear (NASDAQ:MXL) is in the semiconductor sector. The company makes analog, digital and mixed signal circuits, plus wireless infrastructure.
Earnings for the first quarter of 2024 continued the company’s depressing story. Revenue was $95.3 million, which was down 62% from a year ago and 24% from the fourth quarter of 2023.
The company posted a GAAP loss of 88 cents per share, which was a worsening from a loss of 47 cents per share in the same quarter a year ago.
The forecast isn’t much better. MaxLinear is guiding for Q2 revenue between $90 million and $110 million, and operating expenses of $103 million to $113 million. So investors are likely looking at another loss.
MXL stock is down 12% this year. It gets a “D” rating in the Portfolio Grader.
Amkor Technology (AMKR)
Amkor Technology (NASDAQ:AMKR) is another underperforming semiconductor stock.
It packages and tests integrated circuits for semiconductor chip manufacturers, with the completed products used in items such as smartphones, tablets, electric vehicles and consumer products.
The problem with AMKR stock is that the company’s partners have seen a slowdown – particularly in EVs and smartphones. That means there’s not as much business for Amkor, and the company’s revenue and profits show it.
First-quarter revenue was $1.36 billion, down from $1.47 billion a year ago. On the positive side, the company was more efficient than a year ago with an operating margin of 5.4% versus 4.7%. That means that Amkor had income of $59 million and 24 cents per share, versus $45 million and 18 cents per share last year.
Amkor is going to continue to be reliant on other industries that are currently struggling. That’s more than enough reason to stay away.
AMKR stock is down 2% in 2024. It gets a “D” rating in the Portfolio Grader.
On the date of publication, Louis Navellier did not have (either directly or indirectly) any positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article had a long position in BTC and AAPL. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.
