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Is the tech wreck for Amazon, Facebook and others over or just beginning?



  Tech Sell-Off pulls US stocks down

The Tech Rally has come to a standstill

Facebook, Amazon, Apple, Netflix and Google all contributed to the market at an all-time high after another to drive. But suddenly, investors worry about increased regulations because of the Facebook / Cambridge Analytica user data scandal.

The shares of these five major technology companies ̵

1; as well as the Nasdaq and the broader market – have all fallen. But Facebook, Amazon, Netflix and Google owners Alphabet have been particularly hard hit. Each of them has fallen by more than 10% in the past one and a half weeks.

Is it an overreaction?

Analysts expect most big-tech companies to achieve strong results this quarter and for the remainder of the year. Experts say the big-tech stocks should eventually rebound as investors remember how strong their earnings, sales and balance sheets are. Most of these companies are loaded with cash.

Yet, there are legitimate concerns about whether politics will trump fundamentals.

When it comes to crushing Facebook ( FB ) Google ( GOOGL ) and Twitter [19659009] ( TWTR ) (lately another insanely volatile stock) are doing their business, advertisers may flee. And Trump allegedly is considering a change in tax laws or stricter antitrust laws against Amazon that could damage his business.

Too: Facebook has lost $ 80 billion in market value since data scandal broke

Washington will likely not let up. Mark Zuckerberg will be leaving Congress before next month, and stricter privacy policies for the Internet area may follow. That could make tech stocks into risky bets for a while.

"Fundamentals are still positive and there is global growth, which is a good buying opportunity for longer-term investors," said Jeff Schulze, investment strategist at ClearBridge Investments. "But this regulatory overhang will be with the FAANG shares in the next few months."

Wall Street is also concerned about how many top tech companies weigh on the broader market. Apple ( AAPL ) At the end of February, Google, Amazon, Microsoft and Facebook accounted for more than 25% of the weighting in the S & P 500.

The last time that Tech was such a big component of the overall index was during the final stages of tech stock mania on Wall Street almost twenty years ago. Schulze considers it unfair to compare 2018 to 1999.

"This is not the dot-com bubble of the late 1990s, when there were hot topics and ideas that were traded in money," he said. "Key technology companies are already in development – there are real profits and cash flows."

Related: Why now could be a good time to buy Amazon

That may be true. But a company can have solid fundamentals and still be overpriced.

"These are obviously really good companies with strong business models, but the ratings were not even discussed, it was more of a momentum move," said Eric Kuby, chief investment officer of North Star Investment Management.

"So much money was invested in the technology, which was overdue rather than excessive," Kuby said.

Kuby does not necessarily avoid technology. His company owns shares of the alphabet because he thinks it is a relatively good value compared to Facebook, Amazon and Netflix ( NFLX ) . He also owns chip companies AMD ( AMD ) and Qualcomm ( QCOM ) which he In the recent sell-out of technology, things were unfairly punished.

In particular, Qualcomm was hit hard because of the dramatic drama associated with Broadcom's rival rival. The Trump government blocked the takeover and referred to national security issues as Broadcom ( AVGO ) is stationed in Singapore.

Kuby is bullish on stable companies that have fallen out of favor but could offer stronger returns in the event of continued market volatility and a further slowdown in the economy as a whole. He likes Kraft Heinz [19455910] ( KHC ) and drugstore giants CVS ( CVS ) and Walgreens ( WBA ) .

But even if the Nasdaq continues to slide, the technology could not crash the overall market. Several non-technicians in the Dow, especially Boeing ( BA ) and Nike ( NKE ) enjoy in this Year continues solid growth.

Even older technicians have thrived. Cisco ( CSCO ) Intel ( INTC ) and Microsoft ( MSFT ) are among the best Dow performers in 2018.

But one thing seems to be certain. It looks like volatility will continue and that is mainly due to the fast and rapid headlines about the top technicians. Traders make quick bets to try to capitalize on the fast moves – up and down – in these stocks.

"This is a great opportunity for day traders to benefit from the move for tech stocks on the long and short side, and there has been a huge uptrend in the market lately, especially for technology stocks," said John Bartleman, president of brokerage firm TradeStation.

CNNMoney (New York) First published on March 28, 2018: 2:53 pm ET


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