Apple Inc (AAPL), Microsoft Corp (MSFT) and Google Inc (GOOGL): Why UBS Is Overweight Old Tech Stocks


According to the research firm, UBS, Old technology stocks like Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT) and Google Inc (NASDAQ:GOOG) have started gaining back traction of late. As per Hartmut Issel, Head of Equity, Credit & Macro for APAC at UBS CIO Wealth Management, the focus is shifting back on old technology stocks from that of new technology stocks as the increased U.S. capex spending magnifies the opportunity for these companies. Issel said that nearly 30% of the total U.S. capex is earmarked for IT, which makes them an interesting space in the forthcoming term.

Increased U.S. Capex An Opportunity

While the research firm is strongly overweight in the U.S. about the growth outlook of the old technology stocks, it also remains bullish about the Asian region. Issel particularly is overweight on Taiwan and Korea, where a broad range of stocks are dependent on the U.S. capex spending. While Korea is at the bottom of the chain, Taiwan appears to be picking up rapidly in terms of utilization rate. Issel hopes that through the summer, Taiwan and Korea would be able to reach maximum utilization capacity.

New Tech Versus Old Tech

Of late, the new tech stocks have been subjected to an aggressive sell-off, mostly due to excessive over-valuations. Commenting on whether the new tech stocks would be an attractive buy over the old tech stocks, Issel said their outlook about the old tech stocks is relative to the capital expenditure at the moment, rather than the valuations.He said that the new technology stocks are not included in the capital expenditure and therefore, did not form part of their coverage. Though, Issel did not comment on the valuation facts about the new technology stocks, but he did make a point that old technology stocks -like Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT) and Google Inc (NASDAQ:GOOG)- are below market and historical average, which indeed makes them an attractive buying opportunity.

Apple Inc, Google Inc, and Microsoft Corp are among the top 10 popular stocks among hedge funds.