In March, the Nasdaq 100's $634 billion rise in capitalization of the top three tech companies nearly set off a new bull market for tech stocks. However, you need to pay attention to the nature of the recovery, as this may indicate that there is not much time left in the market, according to Bloomberg.
Earnings for Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) confirmed their reputation as “safe havens” as investors surviving the spread of the banking crisis look for large companies with stable incomes to save their cash balances. Three other index heavyweights, Nvidia Corp (NASDAQ:NVDA), Meta Platforms* (NASDAQ:META) and Tesla (NASDAQ:TSLA), also led gainers in March.
While big tech companies can provide some degree of security in volatile times, they are also not immune from risks. Their valuations may be inflated and earnings prospects unclear, and the decline in bond yields, which has been a key driver of the recovery, may be temporary.
Investment expert Keith Lerner, director of Truist Advisory, said that "there is a heavy premium to stay in the sector at a time of heightened risk, which may indicate that the potential for future returns will not be high. While it's possible to dislike the technology, the other options don't look very good either, so a real reversal can be expected if conditions change".
A return to big tech companies and a partial reversal from the widespread weak trend of 2022 has accelerated since the collapse of Silicon Valley Bank, raising fears that the crisis will continue and deepen. Concerns about the economic consequences of the crisis led to a decrease in profitability.