By Nirav Karkera
It is almost implicit that any discourse on global technology corporations must include an honorary section dedicated to the giants incorporated in the U.S. and listed on the country’s bourses. The U.S. is clearly home to the largest technology corporations in the world and dominates the technology sector globally.
The MSCI ACWI Information Technology Index (USD) comprises of global technology stocks of which nearly 79% belong to the U.S., followed by Taiwan with a 5.5% contribution to the overall index. Now, within U.S. Tech, there is a reason a group of technology giants have earned a reputation of being the Big Tech.
2022 has been quite the nightmare for U.S. technology as a sector. As interest rates and inflationary heat soared, many technology companies had to resort to mass layoffs in order to gain a tighter handle on the financials to survive the storm. The leading technology index NASDAQ100 gave up almost a third of its value through the year with the Big Tech being no exception.
Also Read: How Google, Microsoft navigate macroeconomic headwinds will be critical for the US big tech industry
Though away from its peak right before the ominous 2022, the NASDAQ 100 has started to regain lost grounds, albeit at a rather cautious pace. Though it seems that winter is approaching its end, spring seems to be way out of sight.
The inflationary environment, interest rate regime and resultant expectations around economic growth prospects have been teasing the sector since quite some time now. While the U.S. Fed’s easing off the interest rate hike pedal warmed investors up to growth stocks featured on the NASDAQ 100 but the quick follow-through of elevated peak rate projections added to confusion and dented sentiments.
After a stellar run-up in earnings for most Big Tech companies, the last year played spoilsport with earnings plummeting steeply. The cautious undercurrent and volatility is evident across a broad base, even beyond U.S. Tech.
However, while the current year may not be the best time to take profits off the table, there is no reason why it couldn’t be one to accumulate at bargain levels.
(Author is Head of Research at Fisdom )
