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Companies within the tech sector have been a real draw for investors for a long time. Stocks like Meta Platforms (NASDAQ:META), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT), which are all in the tech sector, are some of the most popular companies trading in the U.S. The upside for the tech sector keeps improving with the application of generative AI. And with the Nvidia (NASDAQ:NVDA) stock price tripling year-to-date because of massive growth in demand for their processors and data center units that have been revolutionizing the generative AI space recently.
There is a good and bad side to the tech sector, though; during the pandemic, these companies ballooned in size due to the number of people spending a significant amount of time at home. But, following these events, there was a tech fallout where companies experienced a significant drop in overall sales due to people going back to their normal lives. And there were large layoffs due to tech companies overestimating the workforce they needed to stay profitable, and layoffs are still continuing. Some tech companies were able to weather the storm, but others haven’t faired as well. Below I will talk about three tech stocks falling short of expectations.
Digital Turbine (APPS)
Digital Turbine (NASDAQ:APPS) is a company based in Austin, Texas, that provides advertisers, operators, and other customers with an advertising mobile advertising platform. They allow advertisers to market their products or services in-app and on devices through their mobile channels.
At the end of May, Digital Turbine reported their fiscal 2023 fourth quarter and fiscal year 2023 results, with net income for 2023 at $17 million compared to $35.6 million in 2022. The advertising industry has seen a decline in recent years. Digital Turbine stated a somewhat shaky business outlook due to the macro environment of advertising being unstable at this time. Following their recent earnings report, APPS’s share price fell 43% due to a decline in overall revenue of 11% which is comparing the full year 2023 and 2022. And the company also expressed a weak outlook for the beginning of 2024, showing investors hesitation about its strength.
SentinelOne (NYSE:S) operates a cybersecurity business that uses generative AI for threat protection services. Since their IPO back in July of 2021 SentinelOne’s share price has dropped by over 66%.
Their recent earning results stated that their net loss expanded by 19%, and the company also mentioned that they would be laying off a portion of their workforce because, not, unlike other tech companies, they hired too many people in recent years. Following the release of their fourth-quarter results, the company stock price dropped by 35% primarily due to the company’s profits falling short of expectations and weak guidance for future growth of the company.
SentinelOne has a beaten-down stock, but with slight growth in revenue and the increased attention, which has been centered around AI companies, this is one to keep an eye on if there is a turnaround for them.
Canaan (NASDAQ:CAN) is a crypto mining technology company that produces integrated circuit products such as the Avalon and Dendrite Series. The company has operations internationally.
The company saw a decline in overall revenue of 73% compared to the first quarter of 2022. Canaan’s stock price has been fluctuating this year. With their profitability directly related to the cost of Bitcoin (BTC-USD), the market for computing equipment for Bitcoin mining needs to be in high demand to remain profitable. In early 2021, Canaan was trading at around $35 per share. Now they are hovering around $2 per share. The company is in a rapidly developing industry; it will be interesting to see if it can recover.
On the date of publication, Noah Bolton did not hold (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.