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Tech stocks tend to drive the stock market higher, but not all tech securities are created equal. Many well-known technology companies are currently struggling, with their stock prices sinking further into the red. The problems plaguing tech companies range from excessive debt levels and weak sales to product misfires and declining market share. Whatever the reason, the technology industry continues to be a minefield for investors.
These are particularly volatile times for tech stocks. Companies report earnings amid volatile markets, with soaring bond yields, a possible economic slowdown and flat or slightly rising inflation. Interest rates are likely to remain high for an extended period of time, making conditions especially difficult for highly valued tech stocks. If the market really takes a downturn, the situation for tech stocks could get even worse.
Let’s take a look at some tech stocks to dump or avoid now before a bigger storm hits.
Paramount Global (PARA)
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What to do with streaming giants paramount global (NASDAQ:para) After CEO (CEO) Was Bob Bakish shown the door amid ongoing takeover talks?
PARA’s share price had already fallen by nearly 50% in the past 12 months as the level of uncertainty surrounding the company and its stock increased. After Bakish’s resignation was announced, the stock price fell another 7%. At the same time, Paramount Global is in exclusive discussions for an acquisition by a private company. skydance media. In the best-case scenario, the two companies reach an agreement. But what if it wasn’t?
According to media reports, Bakish was not in favor of acquisition negotiations with Skydance Media. Bakish had been CEO of Paramount Global since its merger with CBS Studios in 2019. PARA was unable to consolidate its activities even after its merger with CBS. What’s more, the company has struggled to make its Paramount+ streaming service profitable even as its traditional TV business has faded into oblivion. Since 2019, PARA stock has fallen 77%.
Cadence Design System (CDNS)
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By most measures, cadence design system (NASDAQ:C.D.N.S.) are good stocks to own. But the company continues to shoot itself in the foot with its forward-looking guidance. Case in point: CDNS stock fell 6% after the semiconductor design software maker released forward guidance for the current quarter that was lower than Wall Street’s expectations. Guidance mistakes overshadowed the company’s strong first-quarter profits.
Cadence Design Systems reported earnings per share (EPS) was $1.17, beating analysts’ expectations of $1.13. First-quarter revenue totaled $1 billion, in line with Wall Street expectations. Sales decreased by 1% compared to the same period last year. The company added that the first quarter ended with a record backlog of approximately $6 billion. Despite higher profits and record orders, management provided guidance that was lower than Wall Street expected, and the stock fell.
Additionally, Cadence Design Systems expects revenue for the quarter to be in the range of $1.03 billion to $1.05 billion and earnings per share in the range of $1.20 to $1.24. Analysts had expected second-quarter sales of $1.1 billion and earnings per share of $1.43. It was the second consecutive quarter that guidance outweighed strong earnings. CDNS stock is up just 4% for the year after falling 12% in April, making it a tech stock to avoid.
Intel (INTC)
Things are only getting worse for chipmakers. intel (NASDAQ:INTC). INTC stock fell 32% in April alone, at a time when most semiconductor company stocks were climbing straight up.
Intel’s stock price fell on weak forward guidance, which suggests a noticeable slowdown for the company. Intel expects second-quarter revenue of $13 billion and earnings per share of $0.10. That was far below Wall Street’s expectations for earnings of 25 cents a share on revenue of $13.57 billion.
Intel’s struggles also stem from its continued efforts to become a foundry that produces microchips and semiconductors not only for itself but also for other companies. The company recently received $8.5 billion in funding from the federal government to help build the foundry. However, that doesn’t seem to be enough to support INTC stock. Despite introducing new chips and semiconductors, the company continues to lose market share to rivals and has struggled to gain traction in the AI space. INTC stock has fallen 41% over the past five years.
On the date of publication, Joel Baglor did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing Guidelines.
