While technology stocks tend to drive the stock market higher, not all tech securities are created equal. Many well-known technology concerns are struggling right now and seeing their stocks sink deeper into the red. Problems plaguing tech companies range from excessive debt levels and poor sales to product misfires and declining market share. Whatever the reason, the tech landscape continues to be a minefield for investors.
Right now is an especially precarious time for tech stocks. Companies are reporting earnings amid a volatile market that is struggling with spiking bond yields, a possibly slowing economy and inflation that is sideways or inching up. Interest rates that may remain higher for longer has been particularly hard on richly valued tech stocks. If the market really tanks, the situation could get worse for tech equities.
Let’s explore some tech stocks to release or avoid now before a bigger storm brews.
Paramount Global (PARA)
What to make of streaming giant Paramount Global (NASDAQ:PARA) after Chief Executive Officer (CEO) Bob Bakish was shown the door amid ongoing takeover talks?
PARA stock was already down nearly 50% in the last 12 months as the level of uncertainty surrounding the company and its stock grew. After the departure of Bakish was announced, the stock fell a further 7%. Concurrently, Paramount Global engages in exclusive discussions to be acquired by privately held Skydance Media. Best case scenario, the companies reach a deal. But what if they don’t?
According to media reports, Bakish was not in favor of the acquisition talks with Skydance Media. Bakish had been CEO of Paramount Global since the company’s creation in 2019 through a merger with CBS Studios. PARA never got its act together following the merger with CBS. Furthermore, it has struggled to make its Paramount+ streaming service profitable even as its legacy TV business slides into oblivion. Since 2019, PARA stock has fallen 77%.
Cadence Design Systems (CDNS)
By most measures, Cadence Design Systems (NASDAQ:CDNS) is a good stock to own. However, the company keeps shooting itself in the foot with its forward guidance. Case in point, CDNS stock dropped 6% after the maker of semiconductor-design software issued forward guidance for the current second quarter that missed Wall Street forecasts. The guidance miss overshadowed a strong Q1 earnings beat from the company.
Cadence Design Systems reported earnings per share (EPS) of $1.17, which was better than the $1.13 expected among analysts. Revenue during Q1 totaled $1 billion, which was aligned with Wall Street forecasts. Sales were down 1% from a year earlier. The company added that it ended Q1 with a record backlog of nearly $6 billion of orders. Despite the earnings beat and record orders, management provided guidance below Wall Street estimates, sending the stock lower.
In addition, Cadence Design Systems projects revenue of $1.03 billion to $1.05 billion for the current quarter, with earnings of $1.20 to $1.24 per share. Analysts had been looking for Q2 revenue of $1.10 billion and $1.43 a share in earnings. It was the second quarter in a row where guidance overwhelmed strong financial results. CDNS stock is up only 4% on the year after declining 12% during the month of April, making it a tech stock to avoid.
Intel (INTC)
Things just keep getting worse for chipmaker Intel (NASDAQ:INTC). In April alone, INTC stock fell 32% at a time when stocks of most semiconductor companies were moving straight up.
Intel’s stock has been undone by weak forward guidance that signals a pronounced slowdown at the company. Intel forecast earnings of $0.10 a share on revenue of $13 billion for the current second quarter. That was far below Wall Street expectations for earnings of 25 cents a share on $13.57 billion of revenue.
Also, Intel’s struggles stem from its ongoing efforts to become a foundry, producing microchips and semiconductors for other companies as well as itself. Recently, it awarded $8.5 billion in funding to help with the buildout of its foundries by the federal government. But not even that seems to be enough to help INTC stock. The company continues to lose market share to rivals and is struggling to get traction in AI, despite releasing new chips and semiconductors. INTC stock is down 41% in the last five years.
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.