Laid-off Silicon Valley workers panic sell their startup stocks as valuations plummet – here are 3 top tech stocks for 2023 that will make real money

Laid-off Silicon Valley workers panic sell their startup stocks as valuations plummet – here are 3 top tech stocks for 2023 that will make real money

Laid-off Silicon Valley workers panic sell their startup stocks as valuations plummet – here are 3 top tech stocks for 2023 that will make real money

The white collar recession is in full swing.

After nearly a decade of six-figure salaries, easy jobs, and extravagant office perks, Silicon Valley companies are finally cutting back. Nearly 90,000 tech workers were laid off in 2022 alone. This year has not started well either. Amazon announced 18,000 job cuts on January 5.

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And now SEC filings show that Microsoft plans to lay off 10,000 employees by the end of the third quarter.

It’s not much better for those who have (so far) escaped the layoffs. Countless tech companies, both private and public, have seen their valuation fall over the past 12 months.

And now the Financial Times reports that a number of panicked workers are “flooding secondary markets” with their shares of their former companies. Which means those valuations are likely to fall even further.

Here’s what that could mean for your portfolio – and where you might want to go.

Tech is falling apart

Record-low interest rates over the past decade have prompted more investors to look for risky investments. Losing tech companies may have been the riskiest place for this excess cash. Tech valuations have skyrocketed since 2020, allowing startups and tech giants to use their inflated inventory as a way to retain talent.

Tech workers were paid excessive amounts of share-based compensation. Some companies, such as Snap and Pinterest, even paid up to 46% of their total compensation in the form of stock options. This increased the overall compensation of tech workers during the boom, but is now having the opposite effect as valuations plummet.

The Invesco QQQ Trust (NASDAQ:QQQ) — a fund that tracks technology stocks — is down 22.7% over the past 12 months. Meanwhile, private companies have also seen their valuation fall by as much as 80%. According to a recent report from the Financial Times, employees of these companies are rushing to make money in secondary markets.

Companies struggling to turn a profit are the biggest losers so far. An index of loss-making companies compiled by Morgan Staney is down 54% over the past year. Many of these money-losing companies have seen their valuations plummet to pre-pandemic levels.

Looking ahead, some experts think valuations will not recover until the Federal Reserve reverses its interest rate strategy. Lower or stable interest rates can make risky technology stocks more attractive. However, that won’t happen until the end of 2023 at the earliest, according to interest rate swaps.

Until then, investors should probably focus on highly profitable tech companies that have been unfairly penalized during this crash.

Adobe

Adobe (NASDAQ:ADBE) has lost 31% of its value in the past year. The company significantly underperformed the broader market. However, the underlying business is still thriving.

The company reported $17.61 billion in revenue for fiscal year 2022 – 12% higher than the prior year. And in September, the company acquired design platform Figma, which expands Adobe’s suite of essential design tools.

The company is also getting involved in the upcoming artificial intelligence boom by tracking how users use essential tools and integrating OpenAI’s tools with Figma.

The stock trades at a price-to-earnings ratio of 33.9.

READ MORE: 4 Easy Ways To Protect Your Money From Red-hot Inflation (Without Being A Stock Market Genius)

Microsoft

Microsoft (NASDAQ:MSFT) is also getting involved in the AI ​​boom. The company was an early investor in OpenAI and now has access to ChatGPT for its Bing search engine. The integration could be completed early this year, meaning the online search market is poised for disruption.

But none of this is reflected in the share price. Microsoft has lost 21% of its value in the past year. It now trades at just 24.5 times net earnings per share.

Apple

The most profitable technology company in the world certainly deserves a mention on this list. Apple (NASDAQ:AAPL) posted $6.11 in earnings per share in its most recent quarter – up 9% year-over-year. This year, the company is expected to launch a new virtual reality headset and continue its supply chain migration from China to India.

Apple stock trades at 21 times earnings, making it an ideal target for investors in 2023.

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This article provides information only and should not be taken as advice. It comes without any kind of warranty.

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