MW This fund surged 40% last year. The manager likes Netflix and these two stocks

By Barbara Kollmeyer

Anthony Wang expects big technology companies will have a tougher year in 2025

A 23% return for the S&P 500 last year was certainly nothing to sniff at, but T. Rowe Price's $10.41 billion Science & Technology Fund PRSCX blew that out of the water with a 40.3% gain.

Granted one year does not a mutual fund make, but the fund is also beating the S&P over three, five and 10-year periods.

Of course, it's been good to be invested in big technology companies and the Science & Technology fund's most heavily weighted positions are big names everyone's heard of: Meta Platforms, Alphabet, Microsoft, Apple and Nvidia.

Portfolio manager Anthony Wang credits the performance to AI infrastructure and stocks like Nvidia, Broadcom and Marvel, overweighting companies like Meta and under weighting software.

"I would say you had to get in the right side of AI infrastructure," he said. In the last quarter of 2024, a number of AI stocks inflected at the application layer, such as Palantir $(PLTR)$, with its government and commercial contracts. App-monetization company AppLovin (APP) started incorporating AI into its products, and the stock is soaring Thursday on forecast-beating results and an upbeat outlook. He owns both stocks.

Wang says the heavy concentration of big technology stocks in U.S. markets is a valid concern. "I think what matters is earning and top-line growth, and if they can continue to outgrow the broader market, that's what matters. And that was what happened over the last two years," he said.

The manager said while those big companies drove over 50% of earnings growth in the S&P 500 last year, that likely won't happen this year, as those companies increase capital expenditure due to investments in AI.

While those big names are not leaving his portfolio, the fund started "broadening out" toward the end of last year and into this year.

"I think that, if you look at my framework, it's always earnings, growth, valuation, quality of company," he said. While the quality remains pretty high, valuation has gotten tougher and earnings growth faces tougher comparisons, he adds.

"I think there's probably prudent risk management to take here and not play to the last dollar and be more balanced, and this is how I'm thinking about it," he said.

Investors might want to be open to other opportunities where earnings may have bottomed, such as industrial semis in the analog space, or IT services that have been laggards, he said.

He did sell stocks that have performed well, rotating into similar companies that are earlier in the stages of growing earnings power or valuation upside. He exited online used car retailer Carvana $(CVNA)$, which he says was a "winning stock," and pared back on credit rating group Fair Isaac $(FICO)$, "which had a really nice story over the last year," but saw climbing valuations.

A relative newcomer to the fund that he's been buying is Visa (V), which Wang describes as a high-quality company that offers growth at a reasonable price and is less expensive than Apple. "The consumer is getting better and it's seen more volume go through, so you know I think that looks pretty attractive," he said.

Wang has also been buying Robinhood (HOOD), noting its new trading platform and a likely beneficiary of crypto deregulation. "That is kind of the gateway that a lot of millennials and younger people are using to start their financial careers, so that's one that I have liked," he said.

Robinhood reported late Wednesday that crypto was at the forefrfont of a strong quarter strong quarter, and shares are surging ahead of the open.

He said the story has shifted at Netflix $(NFLX)$, with the focus no longer falling so heavily on how many subscribers they have. "I think there's a good story there."

Read: Retail investors bought the dip after hot CPI. This Goldman strategist says the tide is about to turn.

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are steady with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y slipping. The dollar DXY is down as gold prices (GC00) climb. European stocks XX:SXXP are up amid hopes for Ukraine/Russia peace.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              6051.97    -0.16%  1.72%   2.90%   21.02% 
   Nasdaq Composite                                                     19,649.95  -0.22%  0.71%   1.76%   23.90% 
   10-year Treasury                                                     4.608      16.30   -0.90   3.20    38.09 
   Gold                                                                 2940.9     2.11%   7.06%   11.43%  45.87% 
   Oil                                                                  70.66      0.20%   -9.31%  -1.68%  -9.49% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Weekly jobless claims and producer prices are due at 8:30 a.m.

Deere & Co (DE) was slumping on the tractor maker's guidance.

Cisco $(CSCO)$ shares jumped after its AI-fueled growth.

Applied Materials $(AMAT)$, Airbnb $(ABNB)$ and Palo Alto Networks (PANW) report after the close.

More than a century old, New York hot-dog chain Nathan's Famous $(NATH)$ reportedly considering a sale.

Best of the web

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Trump administration set to purchase $400 million worth of armored Teslas

Ukraine war: Peace talks risk short-term win that rewards Putin whose red lines haven't shifted

The chart

The chart flagged by Morgan Stanley shows the percentage of U.S. citizens with passports reached 50% for the first time ever in 2024 from just 4% in 1990, notes a team led by analyst Edouard Aubin, who say this is good for luxury goods. "In 2025, we expect U.S. nationals to be the main growth engine of the luxury industry, with worldwide spend up 8% to 10%, thus accounting for [circa] 40% of total industry growth," they said. Europe, which saw the vast majority of that spending last year, is front in line for that growth, said the bank.

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   PLTR    Palantir Technologies 
   AAPL    Apple 
   GME     GameStop 
   SMCI    Super Micro Computer 
   BABA    Alibaba 
   BBAI    BigBear.ai 
   TSM     Taiwan Semiconductor Manufacturing 
   AMZN    Amazon 

Random reads

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In China, people are getting paid to get married.

-Barbara Kollmeyer

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(END) Dow Jones Newswires

February 13, 2025 07:01 ET (12:01 GMT)

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