Recent big tech earnings reports have reportedly made Wall Street worried about the year’s end.
As Bloomberg News reported Sunday (Nov. 5), companies like Apple, Meta, Tesla and Alphabet have given investors cause for concern, whether it was Apple’s lukewarm holiday forecast, Google’s cloud sales or Tesla suggesting electric car demand has diminished.
It’s all making investors anxious, despite a strong performance by the Nasdaq 100 Stock Index last week, the report said.
“This is all about failure of future guidance,” Scott Colyer, chief executive at Advisors Asset Management, told Bloomberg. “Big tech stocks were priced to historic perfection so that left investors disappointed after those companies came up short.”
The report noted that the seven largest tech stocks are down an average of about 9% from 52-week highs, with Apple’s market value declining by more than $300 billion.
Bloomberg says its intelligence shows profits for the S&P 500’s largest “grown companies” — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — are on track to climb 50%.
Colyer predicted more woe for some larger growth stocks, and told Bloomberg his company has backed Microsoft, banking on the faith that the company’s investment in artificial intelligence (AI) will bear fruit.
“There’s a lot of AI hype, but not every company is market-ready,” said Colyer. “Stocks may rally into the end of the year, but I wouldn’t say this is an all-clear for tech shares or even the broader market.”
Apple last week issued a sales forecast for the holiday season — typically its strongest period — that fell below Wall Street estimates.
The company said this was down to reduced demand for iPads and wearables, a projection that has sparked concern about overall holiday demand, with experts predicting the slowest rise in sales during the critical shopping period in years because of inflation.
Apple’s forecast came on the same day that the National Retail Federation (NRF) said it anticipates holiday spending to get back to a pre-pandemic growth rate of between 3% and 4% this year. That growth rate is slower than what was seen over the last three years, but comparable to the average annual increase of 3.6% seen in the 10 years before the pandemic, the retail industry advocacy group said.
Meanwhile, investors are apparently feeling more confident about another huge company — though not a tech company.