Although a recent tech setback has led to widespread pessimism about the sector, long-term investors should still consider Big Tech names like Amazon ( AMZN ), according to Jefferies senior research analyst Brent Thill (video above) .
“Look, technology is on a decline right now,” he told Yahoo Finance. “It’s not the space where people want to be; they want to be in other sectors… I think ultimately the opportunity is to put this away for three years and you’ll be very happy three years from now.”
Thill is particularly bullish on Amazon right now. Amazon Web Services, the company’s cloud business, has thrived, and while the company’s retail business is currently in the shadows, he expects that business to bounce back.
“Right now, Amazon is not where the consumer is,” Thill said. “We’re all traveling. We’re not spending money online. We’re [instead] spending money on restaurants, live shopping, travel, airlines and hotels. So I think long-term investors have an opportunity to buy the stock now and, over time, we think the retail business will come back into vogue. It is already out of fashion.”
However, he does not expect this return to be immediate.
“I think it will last until 2023 before that [e-commerce] business is really finding its footing again,” Thill told Yahoo Finance. “I think consumer spending is far from where Amazon’s core is, but I think it will come back over time and they’ll go growth and better margins.”
Additionally, Thill thinks that still-young CEO Andy Jassy will prioritize “areas where [Amazon] can make money” and is looking for “predictability and recurring revenue,” which he counts as positives in Amazon’s history.
Amazon is set to report earnings on Thursday.
Not all optimism
Thill’s enthusiasm doesn’t necessarily translate to other names in Big Tech, including Twitter ( TWTR ).
“I think Twitter’s business is basically a disaster right now,” he said. “You see reports of employees leaving, employees who are working eight-hour weeks. It seems like the feeling is terrible on the inside, and you see executives flying out of that place. So I think in the short term, they have to lay the ship down.”
So much of Twitter’s future is tied to how the company’s court battle with billionaire Tesla CEO Elon Musk plays out. For Thill, he’s operating on the idea that the impasse is likely to be resolved at least somewhat in Twitter’s favor. In April, Musk initially offered to buy Twitter for $44 billion, or $54.20 per share — the company’s stock has now fallen to $39.08 per share, as of the open this morning.
“I think we’re all under the assumption that, hopefully, something will be done and it just might not be at the $54.20 opening price,” he said.
Allie Garfinkle is a senior technology reporter at Yahoo Finance. Find him on Twitter @agarfinks.
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