Still a premium
Jul 19, 2022
The news yesterday that Apple plans to slow hiring and spending growth next year in some divisions to cope with a potential economic downturn triggered a 2% drop in the share price and further weakness in the Nasdaq. This comes at a moment were more and more prominent investors start to air opinions that the worst is over for big tech after a fall of 27% of Nasdaq 100 since the beginning of the year. As Bloomberg columnist John Authers rightly points out, this could be wishful thinking as technology trades still at a significant premium to the rest of the market. Not so long ago, from the financial crisis to about 2018, this premium was inexistent. While Netflix will kick off the big-tech result season this week, we would be prudent before rushing in again as there could be further disappointments ahead in terms of fundamentals and multiple contraction.