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Worried Over Big Tech Regulation? Bet on These 3 Smaller Stocks
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The U.S. Technology sector continues to witness intensifying scrutiny over antitrust issues, data usage, privacy, and the use of advanced technologies like AI and anti-competition practices. These have been taking a toll on tech bigwigs for quite some time.
Companies like Alphabet (GOOGL - Free Report) , Meta Platforms , previously known as Facebook, Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) are currently facing various lawsuits, federal and state legislations, and strict regulatory activities in other regions like Europe and the Asia Pacific.
The growing public distrust on these companies due to rising concerns over consumer data privacy is boosting the demand for tech sector regulation.
Furthermore, a bipartisan movement is going on in the tech sector. Both Republicans and Democrats believe that tech giants are very powerful and agree on 'big tech regulation.'
A bipartisan bill has been introduced by lawmakers of the Senate, Platform Competition and Opportunities Act, which aims at limiting these companies from making acquisitions that disturb market competition. The bill has been passed by the House Judiciary Committee as well.
Apart from this, the House introduced five bills, focusing on strictly scrutinizing tech monopolies. The bills might ask bigwigs to sell off parts of their businesses, restrict them from practicing preferred ranking of their products and services, and stop acquisition of nascent companies.
Challenges Faced by Tech Giants
The bills along with the enforcement of stringent policies pose serious challenges to the above-mentioned companies.
Alphabet's division Google has been accused of antitrust violations abroad and faces antitrust lawsuits from many state attorney generals in the United States. Recently, a lawsuit was filed against Google for abusing its power over app developers on the Play Store.
Both Google and Apple continue to face strict regulatory pressure against their unfair trade practices with small local businesses. Both companies have exploited small app makers by charging a significant chunk of their sales and discarding the apps anytime.
Apart from this, Apple is accused of abusing its control over its mobile devices, harming competition and inflating prices via iPhone app sales.
Meanwhile, Amazon was questioned whether it uses third-party seller data in an anti-competitive way. Recently, the company was accused in India of copying sellers' products on its marketplace for its in-house brands and putting its home brand products at the top of search results.
Amazon has also been alleged to enjoy a monopoly over third-party sellers on its e-commerce platform.
Meanwhile, Meta has been facing allegations of squashing competition illegally by acquiring its potential rivals. The company's Instagram and WhatsApp buyouts remain the perfect examples of the same.
Further, Meta, which houses vast consumer data, is persistently facing lawsuits against data privacy issues worldwide.
Bet on These 3 Stocks
Given the challenging scenario for tech bigwigs, investors looking for bigger returns can consider the following companies with strong fundamentals.
Image Source: Zacks Investment Research
One Stop Systems (OSS - Free Report) is riding on the growing momentum across the media and entertainment markets on the back of improving sales of its ruggedized servers. Solid demand for the company's differentiated military AI transportable data processing and storage products remains another tailwind. It is continuously gaining traction among new applications within key accounts, which remain other positives.
The Zacks Rank #1 (Strong Buy) company has returned 14.3% on a year-to-date basis. It designs and manufactures ultra-dense high-performance computing systems for learning, oil and gas exploration, financial trading, media and entertainment, defense, and traditional HPC applications.
We believe that its expanding customer base along with its well-performing European subsidiary, Bressner, will likely aid its financial performance in the days ahead.
Notably, One Stop Systems has a Growth Score of A. Further, it has a market cap of $85.3 million.
QuickLogic (QUIK - Free Report) is gaining from the growing demand for its IP-related products. Further, its strength in sensor processing, display and visual enhancement, and smart connectivity is aiding business growth. Additionally, its recent partnership with onsemi to integrate AI and ML algorithms in a bid to implement a wide range of industrial IoT applications remains a major positive. Further, its partnership with Rubidium to expand its offerings of voice recognition solutions is expected to drive its momentum across IoT edge applications.
The Zacks Rank #2 (Buy) company, which develops ultra-low power multi-core voice-enabled SoCs, embedded FPGA IP, and Endpoint AI solutions, has returned 34.9% on a year-to-date basis. The company's well-performing new products as well as mature products are likely to continue driving top-line growth.
Notably, QuickLogic has a Growth Score B. Further, it has a market cap of $60.3 million.
CyberOptics is benefiting from the solid adoption of CyberOptics' high precision 3D Multi-Reflection Suppression-based optical sensors for inspection and metrology in key vertical markets like Surface Mount Technology and semiconductor. Its solutions boost customer yields, throughput and operating efficiency, thereby, saving time and expenses. The company has solid growth potential in the market for Micro LED inspection, advanced packaging and metrology.
The Zacks Rank #2 company is a leading provider of sensors and inspection systems, which provide process yield and throughput improvement solutions for the global electronic assembly and semiconductor capital equipment markets. It has returned 85.2% on a year-to-date basis.
Further, CyberOptics has a Growth Score B. Further, it has a market cap of $309.1 million.
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Worried Over Big Tech Regulation? Bet on These 3 Smaller Stocks
The U.S. Technology sector continues to witness intensifying scrutiny over antitrust issues, data usage, privacy, and the use of advanced technologies like AI and anti-competition practices. These have been taking a toll on tech bigwigs for quite some time.
Companies like Alphabet (GOOGL - Free Report) , Meta Platforms , previously known as Facebook, Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) are currently facing various lawsuits, federal and state legislations, and strict regulatory activities in other regions like Europe and the Asia Pacific.
The growing public distrust on these companies due to rising concerns over consumer data privacy is boosting the demand for tech sector regulation.
Furthermore, a bipartisan movement is going on in the tech sector. Both Republicans and Democrats believe that tech giants are very powerful and agree on 'big tech regulation.'
A bipartisan bill has been introduced by lawmakers of the Senate, Platform Competition and Opportunities Act, which aims at limiting these companies from making acquisitions that disturb market competition. The bill has been passed by the House Judiciary Committee as well.
Apart from this, the House introduced five bills, focusing on strictly scrutinizing tech monopolies. The bills might ask bigwigs to sell off parts of their businesses, restrict them from practicing preferred ranking of their products and services, and stop acquisition of nascent companies.
Challenges Faced by Tech Giants
The bills along with the enforcement of stringent policies pose serious challenges to the above-mentioned companies.
Alphabet's division Google has been accused of antitrust violations abroad and faces antitrust lawsuits from many state attorney generals in the United States. Recently, a lawsuit was filed against Google for abusing its power over app developers on the Play Store.
Both Google and Apple continue to face strict regulatory pressure against their unfair trade practices with small local businesses. Both companies have exploited small app makers by charging a significant chunk of their sales and discarding the apps anytime.
Apart from this, Apple is accused of abusing its control over its mobile devices, harming competition and inflating prices via iPhone app sales.
Meanwhile, Amazon was questioned whether it uses third-party seller data in an anti-competitive way. Recently, the company was accused in India of copying sellers' products on its marketplace for its in-house brands and putting its home brand products at the top of search results.
Amazon has also been alleged to enjoy a monopoly over third-party sellers on its e-commerce platform.
Meanwhile, Meta has been facing allegations of squashing competition illegally by acquiring its potential rivals. The company's Instagram and WhatsApp buyouts remain the perfect examples of the same.
Further, Meta, which houses vast consumer data, is persistently facing lawsuits against data privacy issues worldwide.
Bet on These 3 Stocks
Given the challenging scenario for tech bigwigs, investors looking for bigger returns can consider the following companies with strong fundamentals.
One Stop Systems (OSS - Free Report) is riding on the growing momentum across the media and entertainment markets on the back of improving sales of its ruggedized servers. Solid demand for the company's differentiated military AI transportable data processing and storage products remains another tailwind. It is continuously gaining traction among new applications within key accounts, which remain other positives.
The Zacks Rank #1 (Strong Buy) company has returned 14.3% on a year-to-date basis. It designs and manufactures ultra-dense high-performance computing systems for learning, oil and gas exploration, financial trading, media and entertainment, defense, and traditional HPC applications.
You can see the complete list of today's Zacks #1 Rank stocks here.
We believe that its expanding customer base along with its well-performing European subsidiary, Bressner, will likely aid its financial performance in the days ahead.
Notably, One Stop Systems has a Growth Score of A. Further, it has a market cap of $85.3 million.
QuickLogic (QUIK - Free Report) is gaining from the growing demand for its IP-related products. Further, its strength in sensor processing, display and visual enhancement, and smart connectivity is aiding business growth. Additionally, its recent partnership with onsemi to integrate AI and ML algorithms in a bid to implement a wide range of industrial IoT applications remains a major positive. Further, its partnership with Rubidium to expand its offerings of voice recognition solutions is expected to drive its momentum across IoT edge applications.
The Zacks Rank #2 (Buy) company, which develops ultra-low power multi-core voice-enabled SoCs, embedded FPGA IP, and Endpoint AI solutions, has returned 34.9% on a year-to-date basis. The company's well-performing new products as well as mature products are likely to continue driving top-line growth.
Notably, QuickLogic has a Growth Score B. Further, it has a market cap of $60.3 million.
CyberOptics is benefiting from the solid adoption of CyberOptics' high precision 3D Multi-Reflection Suppression-based optical sensors for inspection and metrology in key vertical markets like Surface Mount Technology and semiconductor. Its solutions boost customer yields, throughput and operating efficiency, thereby, saving time and expenses. The company has solid growth potential in the market for Micro LED inspection, advanced packaging and metrology.
The Zacks Rank #2 company is a leading provider of sensors and inspection systems, which provide process yield and throughput improvement solutions for the global electronic assembly and semiconductor capital equipment markets. It has returned 85.2% on a year-to-date basis.
Further, CyberOptics has a Growth Score B. Further, it has a market cap of $309.1 million.