The recent rotation out of tech stocks has only made the decline in some names worse. Already battered and bruised, many of the most disliked tech stocks have fallen sharply since the beginning of July as investors shift capital into value stocks and small-cap securities. This has worsened an already bad situation.
Even before the rotation began, certain tech stocks were unloved by investors. Declining sales, poor earnings, competitive threats and eroding operations conspired to drag certain tech stocks sharply lower over the past year. And the situation does not appear to be improving at many of the most beaten-down companies.
As a result, investors would be smart to get their money out of these three tech stocks by August 1.
Verizon (VZ)
U.S. telecommunications giant Verizon (NYSE:VZ) has just reported second-quarter financial results that were pretty underwhelming. The company announced an EPS of $1.15, which was in line with Wall Street expectations. However, Verizon’s revenue in the quarter totaled $32.80 billion, which missed analyst forecasts that had called for $33.06 billion. Sales were up 1% from a year ago.
The wireless internet provider also failed to raise its outlook. Instead, it maintained its full-year 2024 financial guidance. For all of 2024, Verizon expects its wireless service revenue to grow about 2% and is forecasting EPS of $4.50 to $4.70. Those numbers are at the low end of Wall Street forecasts. VZ stock declined 6% on news of the Q2 print. Year-to-date, the stock is up just over 3%.
The ho-hum results and outlook make Verizon a tech stock to sell.
ASML Holding (ASML)
European semiconductor giant ASML Holding’s (NASDAQ:ASML) stock also took a big hit after its recent Q2 print. ASML reported revenue of 6.24 billion euros, which beat analyst expectations for 6.03 billion euros. The company said its orders increased 24% year-over-year in Q2 as global demand for artificial intelligence (AI) processors strengthened.
While that news might seem positive, ASML’s profit actually declined 18.7% year-over-year. The company’s revenue was down 10% from a year earlier. Management continues to refer to 2024 as a “transition year.” ASML is also being hurt by export restrictions to China, which the Dutch government implemented at the request of the U.S. Even with the export controls, China remains a huge market for ASML, accounting for 49% of its global sales. The China exposure is seen as the company’s Achilles’ heel.
ASML stock is down 12% a week after delivering its Q2 financial results.
Lucid Group (LCID)
Electric vehicle maker Lucid Group’s (NASDAQ:LCID) stock continues to crater as the company announces one piece of bad news after another. The latest terrible news is that Lucid is recalling 5,200 of its 2022-2023 luxury Air sedans due to a software error that can cause a loss of power while driving. This is the second recall impacting the company’s signature EV. Lucid previously recalled 7,500 of its Air sedans due to problems with a coolant heater that could fail to defrost the windshield.
At the end of May, Lucid announced that it’s cutting 6% of its workforce, or about 400 employees, as it struggles with a sales decline and slowing growth. The company said that it will incur $25 million in charges related to the workforce reduction, which it plans to complete by the end of this year’s third quarter. While the Lucid Air has won critical praise from the automotive press, its high price has led to diminished sales. Currently, the base model Lucid Air costs $71,400 and the top model costs more than $250,000.
LCID stock has declined 48% in the last 12 months, making it a tech stock to sell by Aug. 1.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.