Who moans on the stock market about Google, Apple, Meta and Nvidia
According to UBS, the large technology companies in the United States – the so-called Big 6 – are going through a negative phase for earnings. Is the impetus given to the sector by the pandemic running out? All the details
The Swiss financial services company UBS has lowered its rating on the shares of the six main US technology companies from overweight (this indicates those stocks that are expected to perform better than the average on an index) to neutral . The six companies in question, collectively known as the “Big 6,” are Alphabet, Apple, Amazon, Meta Platforms, Microsoft and Nvidia.
WHY UBS PENALITIES THE BIG 6
According to UBS analyst Jonathan Golub, for the Big 6 “earnings momentum is turning decidedly negative after a surge in earnings growth”. The downgrading of the sector rating is “in recognition of the difficult comparisons and cyclical forces weighing on these stocks” and is not “based on extended ratings or concerns about AI.”
HOW IS THE NASDAQ 100 doing
Last week the Nasdaq 100 index recorded its largest weekly decline in over seventeen months due to massive sell- offs in technology stocks. Remarkable was the 10 percent collapse last Friday of Nvidia, the semiconductor company that is making its fortune thanks to artificial intelligence but which has seen $212 billion in market value vanish.
Things got better on Monday, as Bloomberg reports, when the Nasdaq 100 index rose 0.5 percent and Nvidia positioned itself well.
IS THE BIG 6 BOOM DUE TO ARTIFICIAL INTELLIGENCE OR THE AFTERMATH OF THE PANDEMIC?
According to UBS, the excellent stock market results reported by the Big 6 in recent months are not due so much to the explosion of interest in artificial intelligence, but rather to "asynchronous profit cycles" stimulated by the pandemic. According to the financial firm's calculations, the earnings per share growth of the six big technology companies will slow to 42 percent in the first quarter of 2024 compared to +68 percent in the fourth quarter of 2023. By the end of this year, the growth of the rest of the tech sector will surpass that of the most important stocks: analyst Golub spoke of a "deceleration" of large-cap technology companies and an "acceleration" of medium-value companies, which will lead "to a reversal of leadership of titles".
THE JUDGMENT ON THE S&P 500 INDEX
Despite the disruptions in the technology segment, UBS maintains a positive assessment of the performance of the S&P 500 index, which brings together the five hundred largest US companies in capitalisation. In a note, Golub wrote that “with the exception of the Big 6, all other sector recommendations remain valid”; the market is supported by a healthy economy and largely positive fundamentals, Bloomberg reports.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ubs-declassamento-giudizio-big-6-tecnologia/ on Tue, 23 Apr 2024 08:16:55 +0000.