The pandemic-led technology boom seems to be cooling down now due in-part to the prolonged semiconductor chip and components shortages that are creating production bottlenecks. Given the industry’s slowing growth, we think Infinera (NASDAQ:INFN) and Latch, Inc. (LTCH) are best avoided now, considering their bleak fundamentals. Also, analysts have recently downgraded these two stocks. Read on.The COVID-19-pandemic-fueled tech boom seems to be cooling down due to supply chain disruptions. According to FactSet, S&P 500 information technology companies are expected to report 29% and 19% respective year-over-year earnings and revenue growth for the third quarter, compared to the second quarter’s 48% and 22%. Analysts expect the industry giants to experience shortfalls because of global supply chain disruptions.
Furthermore, the tech industry has become highly overcrowded, with many new companies venturing into the space to take advantage of its long-term growth prospects. With established companies dominating the industry, relatively smaller and fundamentally weak tech companies face cut-throat competition.
Given this backdrop, Infinera Corporation (INFN) and Latch, Inc. (LTCH) were recently downgraded by analysts. INFN was downgraded by JPMorgan Chase & Co. (NYSE:JPM) from ‘neutral’ to ‘underweight,’ and LTCH was downgraded by Goldman Sachs Group Inc. (NYSE:GS) from ‘Buy’ to ‘Neutral.’ Therefore, we think these two stocks are best avoided now.