Activision Blizzard, Meta, Google are among Baird's top tech picks for 2023
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The tech sector has had a rough go in 2022 and investment firm Baird thinks 2023 may prove better for the industry, while selecting Activision Blizzard (NASDAQ:ATVI), Meta Platforms (NASDAQ:META) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) among the firm's top stock picks for the new year.
Regarding Activision (ATVI), analyst Colin Sebastian said it is the firm's "top near-term pick" - along with PayPal (PYPL) - and said it is likely that Microsoft's (MSFT) proposed $69B acquisition for the Call of Duty producer goes through, a move that could ultimately spur more deals.
"Our best guess is that regulators (or courts) will ultimately approve the acquisition of Activision," Sebastian wrote in a note to clients. "If so, we believe this could set off another wave of consolidation, potentially evolving third party publishers such as Electronic Arts (EA) and Take-Two Interactive (TTWO)."
Sebastian also noted that Meta (META) is likely to regain some of its prowess back in 2023 after a rough 2022, as it continues to make user engagements in Reels, boosts its automation capabilities and continues to grow in shopping and click-to-message ads.
Google (GOOG) (GOOGL) is likely to remain the top name in search given its "unmatched scale, top-tier engineering, and diversifying revenues," Sebastian noted, but competition is rising, particularly from chatbot ChatGPT, which has caused the tech giant to have a "code red" mentality heading into its developer conference next year.
The analyst also noted that Meta (META) and Google (GOOG) (GOOGL) should continue to benefit from increased investment in artificial intelligence and augmented reality. Pinterest (PINS), which competes with the two in social networking and advertising, is the firm's top mid-cap pick.
Other predictions for the new year include better margins as tech companies slow spending, potentially protecting earnings; connected TV and streaming ads go mainstream; and TikTok will not be banned in 2023 in the U.S., despite a lot of saber-rattling from politicians.
On Tuesday, Europe's antitrust regulator sent out a lengthy questionnaire to market participants concerning Microsoft's (MSFT) planned $69B acquisition of Activision (ATVI).