Here are the numbers
* The four biggest US technology and internet companies swa more than $560 billion added in market value in the week.
* The biggest gainer being Microsoft Corp, company’s stock advanced more than 12%, its biggest weekly jump since April 2015, and it closed at its highest since August. The week’s jump also brought the stock’s market capitalization back above the $2 trillion mark.
* Google parent Alphabet Inc too surged 12%, its strongest weekly gain since 2021.
* E-tail giant Amazon too jumped 9.1%.
* Apple relatively saw a smaller jump of 4.4%, but then the company’s stock too had been largely resilient to the turmoil.
How Big Tech seems safe haven
Investors seem to be back to Big Tech and their cash-rich balance sheets amid concerns about contagion in the financial sector. In contrast to the uncertainty in the banking sector, major technology and internet stocks offer investors more stability in the current market. The durable revenue streams and market dominance of these companies make them safer bets and relatively insulated from any economic downturn. “Tech is more of a safe haven than your traditional cyclical sectors, and it has already gone through a re-pricing, which means it looks attractive relative to the rest of the market,” Sam Stovall, chief investment strategist at CFRA, told Bloomberg.
“While it sounds like Twilight Zone comment to many investors; tech stocks have become the new safety trade with Big Tech names a major beneficiary of this dynamic,” said Wedbush analyst Dan Ives in a note. The note further added, “Large cap tech and sub-sectors such as cloud and cyber security are seeing much more resilient growth than the Street had anticipated. While budgets are under pressure across the board, enterprises have green lighted projects and deployments in 2023 with many budgets now in place. Numbers for 2023 have been derisked by management teams and these tech stocks have been under owned and still remain in that camp in our opinion.
More upside to come
Ives also said in the note that he further expects tech stocks to rise 20% or more in 2023 “and still have a nice upside this year.”
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