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With the next big round of tech earnings on the horizon, Wall Street is already preparing itself for a raft of quarterly reports that reflect a sense of negativity unlike any seen in the sector in more than a decade.

A combination of the Federal Reserve’s mixed efforts to tamp down inflation, ongoing evidence that a recession could be on the way and spending reductions by both consumers and enterprises has resulted in months of weakness across the tech sector. For example, in the last week of September alone, tech bellwethers such as Intel (NASDAQ:INTC), Advanced Micro Devices (NASDAQ:AMD), Alphabet (GOOG) and Meta Platforms (META) all saw their shares fall to 52-week-lows, and are now just barely above those ignoble levels.

“Outside of the last few days, it’s been an awful few months for tech stocks,” said Wedbush analysts Dan Ives and John Katsingris, in a research report that looks at what to expect from tech stocks in the upcoming earnings season. “To this point, we are entering a crucial third-quarter earnings season.”

The situation is sideways now that Ives and Katsingris said, “Any positive news is negative news in this market, and bad news is perceived as Armageddon, and thus takes down tech stocks in a heartbeat.”

Ives and Katsingris said that not all news has been back for tech stocks, and that industry checks show enterprise software and cyber security shares are “holding up well”. And it should come as no surprise that some of the “favorite” companies currently in software include such usual suspects as Microsoft (NASDAQ:MSFT) and Salesforce (CRM). The analysts also cite Palo Alto Networks (PANW), Fortinet (FTNT) and CyberArk (CYBR) among their top cybersecurity picks.

When it comes to their overall favorite tech company, Ives and Katsingris said Apple (NASDAQ:AAPL) is at the top of mountain.

Regardless of the company involved, Ives and Katsingris said that many eyes will be trained on the status of enterprise spending budgets and their impact on sales growth. “This is the big question,” the analysts said. “It’s easy to punt on discretionary projects and tighten IT budgets as darker storm clouds approach into 2023.”

The analysts added that so much negativity this year has created a situation that is difficult for investors to get enthusiastic, and such sentiment may last for months to come.

Ives and Katsingris said the earnings reports that are set to roll in over the next month “will either expose the negative underlying fundamentals across the tech space and cause massive earnings cut into 2023” or prove that the recent negativity about “the demise of growth tech was premature and many pockets of tech are holding up well.”

One of the sectors likely to see a strong impact from the status of enterprise budgets is semiconductors, where leaders such as Advanced Micro Devices (AMD) and Nvidia (NVDA) have recently been bruised due to concerns about spending among data center customers.

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