Takeaways For Tech Investors

Barron's third Investing in Tech conference took place today, featuring interviews and conversations with leaders from across the tech landscape, including IBM CEO Arvind Krishna, Intel CFO Dave Zinsner, Cisco CFO Scott Herren, and Zoom Video CFO Kelly Steckelberg, plus other executives and plenty of Wall Street investors and analysts.

The first half of 2022 has been humbling for many tech investors. The Nasdaq Composite has lost almost a third of its value and many individual tech stocks have tumbled 50% or more.

At this year's Investing in Tech conference, recession fears were certainly front and center. But those taking the long view remained confident in the ever-increasing relevance of technology hardware and software to consumers, businesses, and today's world in general.

Take Katy Huberty, director of equity research for the Americas at Morgan Stanley and a long-time tech analyst, speaking about Apple stock:

If your iPhone breaks, you're not gonna go with that one. You'll buy a new iPhone. You're not going to delete all your pictures in iCloud because we're in a recession, you're going to continue to pay for your iCloud subscription. I think many of the creatives that use Macs, you know that's a durable good that's that's not a discretionary product.

And so, if you if you give me a longer term horizon, we are very bullish on the stickiness of Apple’s customer base—on their ability to invest through the cycle. But you can’t ignore the fact that the consumer is weakening.

It’s spreading beyond the low end. There’s part of their revenues that are tied to discretionary products, and so we think investors need to be thoughtful in considering some degree of an earnings cut which which we’ve now baked into our estimates.

IBM's Krishna spoke about everything from his company's hybrid approach to the cloud, to quantum computing, to when artificial intelligence might become sentient ("I think we are far, far away.")

Cisco's Herren discussed the supply-chain disruptions that been driving up the company's costs and caused results to disappoint last quarter ("It's one of the most frustrating things I'm involved with.") He also offered predictions on the future of work.

Zoom's Steckelberg said that she was confident in Zoom's ability to take market share from rivals such as Microsoft Teams. She also elaborated on Zoom's next chapter with workers returning to offices ("What we're really striving to be is an operating system for your work day.")

Intel's Zinsner spoke about the more than $100 billion in spending that the chip maker is planning for the next half decade to build out its semiconductor fabs. He said the pace of that investment could depend on if and when Congress passes the CHIPS Act, which includes funds meant to boost U.S. chip production and development.

Henry Ellenbogen, chief investment officer at Durable Capital Partners and a member of the Barron's Roundtable, summed up the angle for investors: Focus on quality and fundamentals when the market is indiscriminately selling off.

What I would also add to the conversation is the aggressiveness with which we have seen CEOs basically go from a growth plan coming into 2022 to a much more conservative plan. So the companies that have seen weakness are pulling back. And just as interestingly to us, the companies that still see strength, are concerned about investing[...]

To me, what sets up the next cycle's winners are the companies that actually performed well in a downturn and show the ability to drive their business but also invest in the future. And so, to me, the seeds of what makes the next great companies are often learned based on what you learn in a downturn.

Read the full live coverage from Barron's third Investing in Tech conference here.