Technology hardware stocks are unattractive. Amid a recession in North America, corporations are spending less. Seagate’s (STX) weak Q3 results reaffirm a warning for growth investors to avoid tech stocks.
Seagate posted a loss of 28 cents a share, more than the 28-cent loss expected. The firm blamed the extended customer inventory correction for the poor results. It pledged to save $200 million annualized starting in Q1/2024. This will cost $150 million in restructuring charges.
Zoom (ZM), which competes with Microsoft (MSFT) Teams, a free video chat for customers, closed at a 52-week low last week. Despite Ark Invest calling it a $1,500 stock in 2026, Zoom continues to struggle. The video conferencing market is saturated. Zoom has no moat in the sector, which will erode its profit margins.
Corporations, which feel a need to have their staff present at the office, will cancel their Zoom subscription. They do not need to spend on unnecessary software services.
What to Buy
Investors should buy the best-of-the-breed technology giants. This includes Microsoft (MSFT), which is building an artificial intelligence service.
Apple (AAPL) remains an attractive hardware firm. Siri is an under-appreciated AI tool for the platform.