Tag: Reflects

The Current Tech Stock “Bubble” Reflects Pessimism, Not Optimism

By iwano@_84

Since the U.S. stock market started its rebound in early April of this year, technology has been the leading sector. Driven initially by mega-cap tech behemoths Amazon
AMZN
, Apple
AAPL
, Facebook, Google
GOOGL
, and Microsoft
MSFT
, the tech rally has spread into some fast growing mid- and small-cap stocks as well as high-profile IPOs like Snowflake. 

Many investors and pundits are concerned that tech stocks are experiencing a bubble, as in 1999‒2000. However, instead of excessive optimism about the future, rising tech valuations may reflect pessimism about future economic growth and profit weakness in other sectors. Given the current high unemployment rate of 8.4% and the large number of small business closures, Consumer Cyclical, Basic Material, and Energy stocks could have muted profits for an extended period. Technology’s secular growth, fueled by the Internet, cloud computing, ecommerce, and the ongoing digital transformation of business,

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