Tech stocks are not invincible. Despite the hype surrounding artificial intelligence (AI), many tech stocks are struggling and look vulnerable right now. Warning signs are flashing at many leading technology companies and can be plainly seen in quarterly financial statements, proxy votes and various sales and delivery data points.
Being aware of trouble brewing at companies is important if investors are to avoid poor-performing stocks that can drag down a portfolio and leave it deep in the red. Luckily, there is plenty of news and information available for public companies that investors can digest and use to make informed decisions about stocks.
Here are three tech stocks to sell in July before they crash and burn.
Tesla (TSLA)
Investors buying shares of Tesla (NASDAQ:TSLA) after the company reported its latest delivery figures might want to pump the breaks. While TSLA stock gained more than 15% after the company reported second-quarter electric vehicle (EV) delivery numbers, the stock is rising because the data was not as bad as feared. For Q2, Tesla deliveries totaled 443,956 vehicles.
The Q2 delivery number beat Wall Street forecasts that called for deliveries of 439,000. But despite beating analyst forecasts, Tesla’s Q2 deliveries were down 4.8% from a year earlier amid a continued sales decline. At the same time, General Motors (NYSE:GM), one of Tesla’s main competitors, reported that its electric vehicle sales rose 40% year-over-year in Q2 of this year.
Tesla is scheduled to announce its second-quarter financial results on July 23. It’s looking increasingly like a make-or-break quarterly print for Tesla. If the company misses Wall Street targets, TSLA stock could tank.
Micron Technology (MU)
The recent print from Micron Technology (NASDAQ:MU) was a letdown, sending the share price down more than 5%. While the data storage company posted decent results for its recently completed quarter, forward guidance in line with Wall Street expectations left investors wanting more. This was especially true after MU stock gained more than 60% year-to-date on expectations for big growth fueled by AI.
Micron, which manufactures computer memory and data storage products, said it expects EPS of $1.08 on revenue of $7.6 billion for the second quarter of the calendar year. Analysts had been looking for earnings of $1.05 on revenue of $7.6 billion. Micron is benefitting from the current boom in AI as its advanced memory is used with AI microchips and processors. However, Micron’s smartphone and personal computer (PC) business units are struggling with weak global demand, offsetting the AI gains.
Salesforce (CRM)
The latest blow to cloud computing firm Salesforce (NYSE:CRM) is that its stockholders voted against the company’s executive compensation plan, including for CEO Marc Benioff. The rejection comes after shareholder advisory groups raised public concerns about large equity awards granted to Salesforce executives, including Benioff. Last year, Benioff received $39.6 million in total compensation, up from $29.9 million the previous year.
In January, Salesforce’s board of directors gave Benioff a stock award worth $20 million in recognition of the company’s “…strong financial performance in the fiscal year.” However, shareholders disagreed with the stock award, citing the trailing performance of CRM stock and disappointing financial results. Salesforce recently missed its quarterly revenue target for the first time since 2006. Plus, Benioff is already among the largest shareholders of Salesforce, with a stake worth over $8 billion.
While the vote from the annual meeting is non-binding and the board of directors is not obligated to follow it, the situation shows that more cracks are forming at Salesforce. The company’s stock has been flat so far in 2024, badly trailing the 23% year-to-date gain in the Nasdaq Composite index.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
