Apple is scheduled to announce fiscal first-quarter earnings on Jan. 27.
If analysts’ expectations for tech-companies’ earnings fall, it would indicate they don’t foresee a real improvement in demand, and “you have to believe that earnings are going to outpace the market for stock prices to move higher,” Todd said.
Gartner cut its forecast for global IT spending from a prior estimate of 3.6 percent, primarily because of weaker-than- anticipated spending on telecom services, Richard Gordon, managing vice president, said in a Jan. 6 statement. This segment makes up more than 40 percent of the total.
Targeted Picks
Katz says investors can select tech stocks by targeting segments that “lagged last year and are poised to play catch- up.” That’s why he likes companies such as Qualcomm, even though 2013 was “mediocre.” The San Diego-based company is the largest maker of chips for mobile phones, so it benefits no matter who wins or loses market share, he said.
Investors who have conviction in 2014 growth should look past results for the most-recent quarter, which could be somewhat lackluster, Katz said. “Our investment thesis is predicated on how the year plays out, and we continue to like technology into 2014.”