The tech-heavy Nasdaq fell sharply on Thursday, shedding 3.5% in the index’s worst sell-off since October.
Google-parent Alphabet (NASDAQ: GOOGL), Apple (NASDAQ: AAPL), Facebook (NASDAQ: FB), and Microsoft (NASDAQ: MSFT) all fell more than 3%, while Peloton (NASDAQ: PTON) and Zoom (NASDAQ: ZM) lost more than 5%. Nvidia (NASDAQ: NVDA) and Tesla (NASDAQ: TSLA) both sank more than 8%.
“There’s no doubt right now with interest rates going up, talk of inflation, a lot of these high-momentum, high-valuation plays are starting to fade,” said Strategic Wealth Partners CEO Mark Tepper. “But look, it’s also a buying opportunity, because, for us, we love growth, but price matters.”
Of these big tech names, Tepper says he may add to his positions in Peloton and Nvidia.
“I love both companies,” Tepper said. “I would be putting new money to work right there, right now. We were severely overweight Nvidia, we trimmed it a month or two ago. We’re still overweight, though, because we do believe in them, and that was purely a risk management move for us. … Maybe you get an opportunity if it drops another 10% to get in.”
Peloton reported quarterly sales of $1 billion for the first time earlier this month, representing growth of 128% year-over-year. While the company increased its full-year revenue outlook, it warned it is still facing hurdles in the near term in getting its stationary workout bikes to customers quickly as the coronavirus pandemic continues to fuel a surge in demand.
Nvidia delivered an earnings beat on Wednesday, reporting earnings per share of $3.10 on revenue of $5 billion, versus estimates for earnings of $2.81 per share on revenue of $4.82 billion. Despite the beat, shares sank after CEO Jensen Huang said on a call with analysts that he doesn’t’ expect the chipmaker’s business of selling processors to cryptocurrency miners to “grow extremely large.”
But beyond the cryptocurrency market, Nvidia looks strong.
“Our lovely problem, which I wouldn’t consider a problem, is that demand is strong,” said Nvidia CFO Colette Kress following the earnings call. “We have supply to meet our demand. We have supply. Is it tight? Of course. But you will see us add overall supply throughout the year, we’re continuing to purchase overall supply for the long term.”
Chip shortages have hampered the automotive sector in particular recently, with several large carmakers forced to halt production at certain factories due to a lack of available semiconductors.
One such carmaker is Tesla, which said on Thursday that it will shut down its Model 3 production line in Fremont, California for a couple of seeks. But even still, TradingAnalysis.com founder Todd Gordon said he has his eye on the electric vehicle maker now.
“Tesla’s the only one that I’d be looking to add,” Gordon said. “The support from a technical point of view is down around $600.”
Gordon argues that any synergies between Tesla and CEO Elon Musk’s private space company SpaceX could unlock unlimited potential for the EV carmaker. The trader said that the global satellite coverage SpaceX is working on could connect Tesla’s fleet and boost any artificial intelligence possibilities.
As for Tesla’s Model 3 production shut down, analysts aren’t worried.
“We are not overly concerned this supply chain/factory disruption changes the overall delivery trajectory for 1Q and 2021,” said Wedbush analyst Dan Ives.