Technology stocks fell sharply in the US on Wednesday. The Nasdaq 100 index, which follows the largest technology stocks, fell 3.7 percent during the day.
In terms of market capitalization, this represents a drop of more than $1 trillion over the course of Wednesday.
It was the weakest day for technology shares in almost two years, he says news agency Bloomberg.
Among the largest companies in the index, the sharpest decline was the electric car company Tesla, whose share fell by more than 12 percent. Tesla’s results published on Tuesday evening fell short of analysts’ expectations.
Also the chip maker of the third most valuable company in the world Nvidia’s the stock fell nearly seven percent on Wednesday.
Expectations charged at their peak
Asset management company You are married rescuer Valtteri Ahdin according to two factors behind the significant down day: high expectations for profit growth placed on technology companies and investors’ desire to reduce the level of risk after a long rise.
Ahti raises, for example, the expectations loaded up to death Google parent company Alphabetin the result published on Tuesday. The company’s result partly exceeded expectations and after the result, some analysts raised their forecasts about the company’s development. Still, the stock fell by more than five percent on Wednesday.
“Although the result was good, it was still not enough for the market. The expectations for large technology and artificial intelligence companies are so high that it is not enough that the results are good, they must be really good. Investors would also like to see that the massive artificial intelligence investments would yield a concrete result”, Ahti estimates.
On a more general level, Ahti says that the most popular market view throughout the year has been buying US technology and artificial intelligence stocks. According to him, the strong selling pressure of technology stocks indicates that investors want to reduce the risk level of their portfolios and repatriate their profits.
“There has been a really good rise behind here. Now that it has gone so well, it is only natural that investors reduce the risk”, says Ahti.
Nervousness affects the world
Fluctuations in stock exchange rates in the United States are typically seen in other parts of the world as well. On the other hand, on Thursday morning, the futures of major European stock indices are only in a gentle decline, Ahti says.
On a general level, he believes that if investor nervousness continues and the risk levels of portfolios are to be lowered, it will affect the stock market as a whole.
“When the risk is reduced, it is not surgical, but the risk is reduced in general. The fastest way to calculate the risk is to reduce the weight of stocks in the portfolio in relation to bonds.”
Ahti does not see that the settlement date would significantly affect the individual shares of the Helsinki Stock Exchange.
“I can’t think of any direct connections from the Helsinki Stock Exchange to giant technologies. There are many cyclical companies on the Helsinki stock exchange, such as machine shops and the forest industry, which are more connected to the global economic cycle.”
The chief strategist’s faith does not waver
Ahti says that despite the short-term strong fluctuation, he still considers technology companies to be a good investment target in the long term. However, he reminds us that large technology companies in the United States are a very heterogeneous group. For example, the valuations of Tesla and Nvidia are significantly higher than other companies, and Tesla’s margins have actually decreased for several quarters.
“Technology companies, especially if you exclude Tesla, are the absolute best on the US stock market. But it is typical for them that their shares fluctuate very wildly,” says Ahti.
Source: www.arvopaperi.fi
