- Tech stocks are continued to soar as FANGMAN hits a new record-high.
- Throughout July, analysts broadly expected the technology market to slump, fearing inflated valuations.
- Several shares, including Apple, buoyed the technology industry en route to new all-time highs.
The total market capitalization of FANGMAN–Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and Nvidia (NASDAQ:NVDA)–has hit a fresh all-time large.
Contrary to previous predictions, the tech bubble is far from bursting.
Tech is eating the entire world: Complete market cap of FANGMAN only hit fresh ATH in a week when bosses of Enormous Tech have attempted to downplay their dimension in congressional hearing. Combined market cap of Facebook, Apple, Google, Microsoft, Amazon, Nvidia currently at $7.2tn, equal to GDP of Japan and the UK.
In late July, fund managers and analysts warned from the tech stock landscape. They argued that various metrics, for instance, stock-to-revenue ratio, have peaked.
The combined market cap of Facebook, Amazon, Netflix, Alphabet, Microsoft, and Nvidia hitting a record-high suggests momentum remains strong.
Why Analysts Were Concerned About the Tech Bubble, And It’s Still Rallying
During July, analysts predicted the tech stock market to slump. Many believed the market was getting overheated with insufficient data to back this up.
Goldmoney Research stated in the time:
Tech stocks are currently more overvalued relative to the market compared to during the dotcom bubble.
Bloomberg industry analyst Lisa Abramowicz pinpointed the”extreme” valuations from the tech industry :
Tech valuations would be the most intense they have been because the 2000 tech bubble,” based on the ratio of Nasdaq to small-cap stocks.
David Ingles, a Bloomberg anchor, said the gap between big tech and small-cap stocks indicates a summit :
Chart shows U.S. tech stocks may have peaked. Levels is nearing a 3 sigma levels from quarterly mean going back to 1985.
Tech stocks have continued to rally during the past month, quashing worries of an exhausted market. Apple’s discuss, for instance, improved by 10. 47percent on Friday, moving closer to a $2 trillion market cap.
As consumer trends shifted from offline to online following the pandemic, tech stocks have seen increased momentum.
Many people are seeing Netflix, purchasing iPads, ordering online through Amazon, and hunting online entertainment.
The confluence of changing consumer trends and positive market conditions seemingly catalyzed investor opinion.
Some Analysts Foresee a Better Future for Tech
Many analysts believe that the stock market’s momentum is too strong to activate an extended downtrend.
Tom Dwyer, a strategist at Canaccord Genuity LLC, previously noted:
While many dread the current environment is like 2000’dot com’ bubble, the macro backdrop suggests differently. The very various macro background vs. 1999 suggest any pullbacks should prove temporary.
The stock exchange has rallied since April because of the Federal Reserve’s ultra-dovish stance on monetary policy, including rock-bottom interest rates. The U.S. central bank has no intention to change course anytime soon, so a sustained market rally is possible.
Disclaimer: This report reflects the author’s opinion and shouldn’t be considered trading or investment information from CCN.com. The author holds no investment position in the securities unless otherwise noticed.
Last modified: August 1, 2020 3: 52 PM UTC