The U.S.-China trade war is wreaking havoc on technology stocks, with semiconductors and equipment makers experiencing the biggest volatility. Although the trade war isn’t expected to end anytime soon, investors can steer clear of the hostilities by focusing on three blue-chips: Microsoft Inc. (NASDAQ: MSFT), Facebook Inc. (NASDAQ: FB), and Netflix Inc. (NASDAQ: NFLX).
Microsoft is currently the only U.S. company with a trillion-dollar market cap, but at $130 a share, provides good value for investors looking to capitalize on the ever-growing software services segment.
The company’s pivot towards cloud services has allowed it to expand revenues and profitability. Azure is now one of the world’s largest cloud platforms, raking in tens of billions annually. In fact, Microsoft recently beat Amazon in 12-month cloud revenue. Recurring revenue is as solid as they come: Microsoft Office has more than 180 million active monthly enterprise users and 34.2 million consumer subscribers.
Facebook has gotten a lot of bad press lately over its failure to safeguard consumer data. The social media giant silenced the naysayers in its most recent earnings report by exceeding revenue projections and matching forecasts for daily active user growth. Its Stories feature cracked 500 million daily active users across all major platforms: Instagram, Facebook, Messenger, and WhatsApp.
Later this week, Facebook is set to debut the Libra project, a full-fledged cryptocurrency platform that could revolutionize the payments arena. Facebook’s cryptocurrency will be piloted in about a dozen countries later this year with a full launch planned for early 2020.
The company’s extremely low exposure to China makes it a solid choice for investors looking to steer clear of trade-war hostilities. Facebook’s exposure to Chinese markets is only 1-2%, according to RBC Capital Markets.
Netflix opened 2019 on solid footing, with global subscriptions growing by 9.6 million. That’s a 16% year-over-year gain and well ahead of forecasts calling for 8.9 million new subscribers.
After dominating the U.S. streaming market, Netflix has seen the bulk of its growth come from international markets. The company now boasts almost 150 million paying members, a figure expected to increase with the launch of new titles and the return of popular shows like Stranger Things.
Like Facebook, Netflix has very low exposure to China, which should give investors reassurance that its inclusion in their portfolio won’t be impacted by the ongoing tariff war.
Navigating the U.S.-China trade war won’t be easy, especially for investors looking to buy and hold technology stocks. Luckily, some of the big-name tech players offer solid growth opportunities with limited exposure to Chinese markets — a good recipe for your stock portfolio.
Disclaimer: Author holds no investment position in Microsoft, Facebook, or Netflix at the time of writing.
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