Historically, technology stocks have been unstoppable. Some might even argue that stocks from the likes of Facebook, Apple, and Google (now Alphabet)—are relatively safe because of their consistent, steady performance in the market. This belief was further reinforced by the pandemic and the developing trends in virtual telecommunications, streaming, and remote work, allowing tech stocks to flourish in the bullish market.
At the height of the pandemic in 2020, shareholders of five of the biggest tech companies in the world were rewarded generously when their averages were up over 55 percent. As millions of remote workers rely on video conferencing and telecommunications, one major benefactor, Zoom—a virtual conference platform—relished as its shares surged by over 40 percent in the tail end of 2020.
According to a PR statement, Zoom performed so well that its revenue more than quadrupled from 2019, growing at least 355 percent annually.
In May, amid a bear market and several widespread selloffs worldwide, tech stocks began to plummet, with more investors channeling funds to sectors like the healthcare and consumer staples industries.
Faced with uncertainties and inconsistencies in the macroeconomic environment, many investors began to sell off their tech stocks in a bid to consolidate their finances. Canadian e-commerce giant Shopify saw its shares fall to 70 percent year to date after. Following the news, the company laid off 10 percent of its global workforce.
Shopify also faced legal issues earlier this year from crypto holders of hardware wallet maker Ledger. Between April to June of 2020, hackers were allegedly able to access Ledger’s database. These hackers were able to identify and target commonly used passwords to access unauthorized information.
According to court papers, the plaintiffs believed that Shopify and its data consultant, TaskUs, were aware of the breach and kept it a secret. As such, it’s likely that both Shopify and TaskUs will need to shore up their cybersecurity practices to prevent such data breaches from happening once more.
Nvidia, the world’s biggest graphics process unit (GPU) maker, saw its shares dip when it was revealed that the company had experienced a data breach by the hacking group LAPSU$. While no significant business disruptions occurred, consumers were greatly concerned about their privacy.
In July 2022, technology stocks rebounded by nearly 15 percent since June, with companies like Apple and Amazon leading the pack. Both companies experienced a surge of approximately 30 percent. Walt Disney stock, too, jumped after an influx in earnings and subscriber growth. Its streaming platform, Disney+, ended the recent quarter with sales at US$21.5 billion.
So why the sudden interest in technology stocks once again?
Given the inflationary environment, investors are again looking to consolidate their expenditure and mitigate the possibility of losses. According to analysts at Goldman Sachs, several companies are more well-positioned than others to outperform in the current climate.
In an interview with Forbes, several analysts from the firm maintain that the market has underestimated the tailwinds that high inflation will give technology companies that can mitigate the effects of rising costs and prices thanks to their creations.
However, analysts have also argued that not all types of technology stock will improve. Nvidia stocks, for example, continue to fall headlong. In early August 2022, the GPU maker’s share prices were down by over 48 percent since hitting their peak in November 2021.
Reports have also revealed that GPU prices may also crash as GPU makers worldwide reduce the costs of their graphics cards following the cryptocurrency crash and the inflation period. With more stock now than ever before, GPU makers are struggling to push products, which could lead to prices dropping even more.
Currently, Nvidia has plans to repurchase shares worth US$15 billion by the end of 2023; the move will undoubtedly benefit its shareholders with enviable returns.
That said, it’s difficult to predict if tech stocks will hold. Analysts and advisors close to the matter are torn. Some analysts have noted that the current decline means investors can now purchase shares of big tech companies at an attractive and lower-entry price point. In contrast, others question these companies and their ability to maintain profits for the rest of the year.
Of all the big tech companies in the world, it’s worth noting that Facebook’s parent company, Meta, has suffered the most considerable losses of the five major tech companies leading the charge at NASDAQ. So far, Meta’s market value has fallen by approximately half.
Like all other types of stocks, technology stocks will always be susceptible to fluctuations and changes in the micro and macroeconomic environment, making it difficult to predict if such stocks will hold entirely.
For investors facing unstable financial positions and short horizons, it might be wise to properly consider each purchase. It must also be said that companies laying off employees might not always be a cause for concern for investors, as is the case with Robinhood and Carvana, who saw stock prices rise following cost cuts. To invest better, investors should continuously keep up to date with movements in the market and ongoing happenings worldwide.
Historically, technology stocks have been unstoppable. Some might even argue that stocks from the likes of Facebook, Apple, and Google (now Alphabet)—are relatively safe because of their consistent, steady performance in the market. This belief was further reinforced by the pandemic and the developing trends in virtual telecommunications, streaming, and remote work, allowing tech stocks to flourish in the bullish market.
At the height of the pandemic in 2020, shareholders of five of the biggest tech companies in the world were rewarded generously when their averages were up over 55 percent. As millions of remote workers rely on video conferencing and telecommunications, one major benefactor, Zoom—a virtual conference platform—relished as its shares surged by over 40 percent in the tail end of 2020.
According to a PR statement, Zoom performed so well that its revenue more than quadrupled from 2019, growing at least 355 percent annually.
In May, amid a bear market and several widespread selloffs worldwide, tech stocks began to plummet, with more investors channeling funds to sectors like the healthcare and consumer staples industries.
Faced with uncertainties and inconsistencies in the macroeconomic environment, many investors began to sell off their tech stocks in a bid to consolidate their finances. Canadian e-commerce giant Shopify saw its shares fall to 70 percent year to date after. Following the news, the company laid off 10 percent of its global workforce.
Shopify also faced legal issues earlier this year from crypto holders of hardware wallet maker Ledger. Between April to June of 2020, hackers were allegedly able to access Ledger’s database. These hackers were able to identify and target commonly used passwords to access unauthorized information.
According to court papers, the plaintiffs believed that Shopify and its data consultant, TaskUs, were aware of the breach and kept it a secret. As such, it’s likely that both Shopify and TaskUs will need to shore up their cybersecurity practices to prevent such data breaches from happening once more.
Nvidia, the world’s biggest graphics process unit (GPU) maker, saw its shares dip when it was revealed that the company had experienced a data breach by the hacking group LAPSU$. While no significant business disruptions occurred, consumers were greatly concerned about their privacy.
In July 2022, technology stocks rebounded by nearly 15 percent since June, with companies like Apple and Amazon leading the pack. Both companies experienced a surge of approximately 30 percent. Walt Disney stock, too, jumped after an influx in earnings and subscriber growth. Its streaming platform, Disney+, ended the recent quarter with sales at US$21.5 billion.
So why the sudden interest in technology stocks once again?
Given the inflationary environment, investors are again looking to consolidate their expenditure and mitigate the possibility of losses. According to analysts at Goldman Sachs, several companies are more well-positioned than others to outperform in the current climate.
In an interview with Forbes, several analysts from the firm maintain that the market has underestimated the tailwinds that high inflation will give technology companies that can mitigate the effects of rising costs and prices thanks to their creations.
However, analysts have also argued that not all types of technology stock will improve. Nvidia stocks, for example, continue to fall headlong. In early August 2022, the GPU maker’s share prices were down by over 48 percent since hitting their peak in November 2021.
Reports have also revealed that GPU prices may also crash as GPU makers worldwide reduce the costs of their graphics cards following the cryptocurrency crash and the inflation period. With more stock now than ever before, GPU makers are struggling to push products, which could lead to prices dropping even more.
Currently, Nvidia has plans to repurchase shares worth US$15 billion by the end of 2023; the move will undoubtedly benefit its shareholders with enviable returns.
That said, it’s difficult to predict if tech stocks will hold. Analysts and advisors close to the matter are torn. Some analysts have noted that the current decline means investors can now purchase shares of big tech companies at an attractive and lower-entry price point. In contrast, others question these companies and their ability to maintain profits for the rest of the year.
Of all the big tech companies in the world, it’s worth noting that Facebook’s parent company, Meta, has suffered the most considerable losses of the five major tech companies leading the charge at NASDAQ. So far, Meta’s market value has fallen by approximately half.
Like all other types of stocks, technology stocks will always be susceptible to fluctuations and changes in the micro and macroeconomic environment, making it difficult to predict if such stocks will hold entirely.
For investors facing unstable financial positions and short horizons, it might be wise to properly consider each purchase. It must also be said that companies laying off employees might not always be a cause for concern for investors, as is the case with Robinhood and Carvana, who saw stock prices rise following cost cuts. To invest better, investors should continuously keep up to date with movements in the market and ongoing happenings worldwide.
