Tech Sector Slides for Second Week but Amazon Scores Big

The tech sector continued to slipped again this week, continuing a sudden dip that began last Friday.

The S&P 500 IT sector is down 1.14% for the week but up 18% year to date.

The slight downtick in tech came as a surprise for the sector that has been on a run since the election in November. "I think we need to see more of a pullback to say there is a serious rotation going on as opposed to just some profits coming off the top," Chuck Carlson, Horizon Investment Services CEO, told Reuters.

Amazon.com (AMZN - Get Report) was the star of the show on Friday with its $13.7 billion acquisition of high-end grocer Whole Foods (WFM) . The deal has received positive reactions from investors and analysts who believe Amazon can lower food prices and improve the customer experience at Whole Foods with its access to data and its quick fulfillment abilities.

The deal managed to send down a number of consumer names, such as Walmart (WMT - Get Report) , down 4.65%, Target (TGT - Get Report) , down 5.16%, Kroger (KR - Get Report) , down 9.24%, and Supervalu (SVU) , down 14.36%.

Shares of the 'FAANG' stocks -- Facebook (FB - Get Report) , Amazon, Apple (AAPL - Get Report) , Netflix (NFLX - Get Report) and Alphabet (GOOGL - Get Report) -- were all trading down on Thursday. All managed to recover on Friday except for Alphabet, which was down less than 1% to $958.62, and Apple, which was down 1.4% to $142.27.

Here's a breakdown of TheStreet's top five tech ideas you might have missed:

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1. Amazon is catching up to Alibaba on its presence in the grocery sector. 

U.S. e-commerce giant Amazon is purchasing Whole Foods for $13.7 billion, shortly after China e-commerce giant Alibaba (BABA - Get Report) purchased stakes in two separate Chinese supermarkets. In China, Alibaba has started transforming supermarkets to combine the best of the online and offline shopping experiences. Amazon looks to be working the same strategy in the U.S. "This deal is a total validation of our strategy," Alibaba Head of External Affairs Brion Tingler told TheStreet. Analysts and investors expect Amazon to lower food prices and to use its enormous fulfillment operations to deliver perishable goods scarily fast. 

Read TheStreet's full coverage of Amazon's purchase of Whole Foods:

2. Apple is plagued by people's doubt in its ability to innovate.
2. Apple is plagued by people's doubt in its ability to innovate.

Apple unveiled a brand new product last week -- an Amazon Echo competitor called the HomePod -- yet the stock fell this week. That's because people's doubts about the tech giant's ability to innovate have not been put to rest ever since former CEO Steve Jobs died in 2011 and passed the reigns to Tim Cook. Specifically, Apple's voice-activation technology, Siri, has fallen behind Amazon's Alexa and Google Assistant. This is partly because Apple has been reluctant to open its Siri platform to developers, while Amazon officially opened Alexa to developers in late 2015.

3. Uber investors still believe in the company that's in a black abyss of controversies.
3. Uber investors still believe in the company that's in a black abyss of controversies.

On Tuesday Uber Technologies Inc. released a 13-page report by former U.S. Attorney General Eric Holder and lawyers at Covington & Burling LLP that detailed how the embattled ride-hailing company should address issues in its workplace culture, including complaints of sexual harassment and a lack of diversity. That same day Uber CEO Travis Kalanick announced in an email to employees that he would be taking an indefinite leave of absence to mourn his recently-deceased mother. 

But a number of Uber's early investors told TheStreet they still have hope for the company that's currently valued at approximately $70 billion, which makes it the highest-valued private tech company in the U.S.

Mitchell Green, a partner at Lead Edge Capital that invested in Uber at the $40 billion valuation in 2015, said the company's issues hasn't changed its value. "Even if I hated the company I wouldn't exit my investments," Green explained. "[The issues] truly haven't affected the business at all."

4. Alibaba vice chairman Joe Tsai tells TheStreet about Alibaba's retail and expansion plans
4. Alibaba vice chairman Joe Tsai tells TheStreet about Alibaba's retail and expansion plans

Alibaba vice chairman Joe Tsai spoke with TheStreet earlier this week, following the company's two-day investor event last week where the company announced revenue could grow up to a stunning 49% in the next year. 

The company is expanding into department stores and supermarkets because it can use its data and knowledge to help improve the customer experience at physical stores. The traditional way of thinking about retail vs. e-commerce is that they work against each other, where e-commerce is cannibalizing retail," he said. "But it doesn't have to be that way.

Tsai also spoke about its global expansion plans, claiming that helping businesses outside China sell goods on its sites is a natural step for it. He also noted the advantages of being based in China, including access to the best manufacturers and access to the large China consumer base. 

5. Amazon could buy Slack, or was that just a distraction from its Whole Foods purchase?
5. Amazon could buy Slack, or was that just a distraction from its Whole Foods purchase?

On Thursday, Bloomberg reported that Amazon was considering a $9 billion bid for workplace chat and collaboration platform Slack. Prior to Amazon's Whole Foods purchase for $13.7 billion, its largest deals were the nearly $1 billion purchase of e-game video streaming company Twitch Interactive Inc. in 2014 and the 2009 acquisition of Zappos.com, which was worth $1.2 billion at closing because of gains in Amazon's share price.

By buying Whole Foods and considering a Slack purchase, Amazon could be taking lessons from Google and Facebook, which have both been more willing to open their wallets when it comes to acquisitions. "Are we about to enter a new threshold or era for Amazon where the company is willing to make acquisitions greater than $1 billion?" Maxim Group analyst Tom Forte asked. "I would say that is a possibility."

Read TheStreet's full coverage of Amazon's purchase of Whole Foods:

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