The big tech companies have faced increased scrutiny and antitrust lawsuits in recent months leading to a tacit understanding that the technology sector at large wasn’t doing all so well. Yet, the stock market has a different story to tell.
The benchmark S&P 500 index has recovered close to 8% since mid-May, with eight tech companies (FAANG, Nvidia, Microsoft, and Tesla) accounting for over 50% of its gain.
Lo Toney’s comments on CNBC’s “TechCheck”
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Plexo Capital’s Lo Toney attributes the strength of tech stocks to easing COVID-19 restrictions, the stability of business models, and the growth potential in these companies at large. In his interview with CNBC’s “TechCheck”, he said:
“There’s going to be some nice momentum coming out of some of these surprises with the earnings. I’m highly bullish and confident that the tech stocks are, without questions going to lead the way. That said, there’s a lot of price to perfection within the market. So, we just need to make sure that those numbers are met. We’ll see stability, but we anticipate that we’re going to see some nice earnings surprises as well.”
The impact of China’s crackdown on tech giants
Concerns regarding the tech space have been particularly intense this year after China’s crackdown on tech giants that resulted in a loss of more than 800 billion in valuation since February. Drawing a comparison between the U.S. and China, however, Toney said:
“Investors in the United States have this insatiable appetite for growth. Things are different in the U.S. because here, we do see the ability to navigate and work with the government at times. Such is not the case in China.”
Scrutiny on the U.S. tech giants, however, has also been on the rise. Only days after state attorney generals sued Alphabet’s Google for anti-competitive practices, IAC CEO Joey Levin said last week that Apple could be the next target.
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