Big Tech’s Growth Status in Doubt With Weaker Sales Outlooks
Earnings for most of Big Tech are out and the group delivered even bigger profits than Wall Street anticipated. The bad news: the outlook for repeat performances in the fourth quarter dimmed.
Apple Inc., Alphabet Inc., Meta Platforms Inc. and Tesla Inc. all gave investors reason to fret about growth. From Apple's muted holiday outlook to Google parent Alphabet's lackluster cloud computing sales results, a recurring theme for the cohort was caution. Meta warned that the year ahead is looking less predictable, while Tesla raised concerns that demand for electric cars is starting to weaken.
That's stirring angst for investors even as the Nasdaq 100 Stock Index rallied last week, rising 6.5% and clocking in its best week in a year.
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“This is all about failure of future guidance,” said Scott Colyer, chief executive at Advisors Asset Management. “Big tech stocks were priced to historic perfection, so that left investors disappointed after those companies came up short.”
Tech stocks are now on shaky ground. The seven biggest tech stocks are down an average of about 9% from 52-week highs. Apple alone has lost more than $300 billion in market value.
The selloff has made valuations cheaper, but they're still pricey and with future expansion less certain, investors are balking at paying up for the stocks. Shares of the seven biggest companies in the S&P 500 Index are priced at an average of 31 times projected profits, according to data compiled by Bloomberg. That's nearly twice the multiple of the other 493 stocks in the benchmark.
Profits for the seven biggest so-called growth companies in the S&P 500 — Apple, Microsoft Corp., Alphabet, Amazon.com Inc., Nvidia Corp., Meta and Tesla — are on
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