The Nasdaq Composite has plunged in response to expectations for higher interest rates.
Michael Nagle/Bloomberg
The tech megacaps that were some of the strongest stocks over the past two years aren’t showing any immunity from the selling crushing both the market generally, and tech shares specifically, due to continuing concern about rising interest rates and high valuations.
The Nasdaq Composite is down more than 15% for the year to date. The market has been particularly quick to sell off last year’s biggest winners. Nvidia (ticker: NVDA), which rallied 125% last year, has tumbled nearly 28% since the end of the year, cutting the chip company’s market capitalization by about $200 billion in the process.
The best performer among the big tech players is the contract chip manufacturer Taiwan Semiconductor (TSM), which rose only 12% last year. It is about 1% higher for the year to date. The company posted strong fourth-quarter results, benefiting from a nearly insatiable global demand for chips.
Apple (AAPL) has held up reasonably well, with a loss of 12% for the year to date, though the stock has lost about $500 billion in market cap since its recent flirtation with a $3 trillion valuation. Apple reports its earnings later this week, and the Street lately has been growing more optimistic about December quarter iPhone sales. At the same time, Apple continues to support its stock with an aggressive share repurchase program.
The upshot is that the company has become the tech investor version of digital gold, offering a haven in tough times.
Alphabet (GOOGL) is down 13%, while Meta Platforms (META) is off 15%. Both continue to wrestle with regulatory, legislative and legal challenges, but both seem poised to benefit from rapid growth in the online advertising market.
Microsoft (MSFT) shares are 15% lower for the year, though expectations are high for the company’s December quarter earnings report, due after the close of trading on Tuesday. There is little sign of a slowdown in the company’s fast growing cloud-computing business.
Meanwhile, investors will be listening for any new information on the company’s pending acquisition of the videogame publisher Activision Blizzard, announced last week. Microsoft has said that the deal will not affect its stock-repurchase program. It plans to finance the nearly $70 billion deal from cash on hand.
Amazon.com (AMZN) shares are down nearly 18% for the year, making the company the worst performer in the big-cap tech group aside from Nvidia. There are worries that December quarter results from the company’s e-commerce business will prove to be disappointing, although the Amazon Web Services business is likely to continue to post strong growth. Amazon will report financial results next week.
Write to Eric J. Savitz at eric.savitz@barrons.com
Source: finance.yahoo.com