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For the second consecutive day of trading, shares of some of the largest technology companies on the planet—including Apple (AAPL - Free Report) , Facebook , Amazon (AMZN - Free Report) , and Microsoft (MSFT - Free Report) —dipped on Monday morning.
Last Friday, Goldman Sachs warned investors in a note that there are multiple potential unaccounted for dangers in the tech sector. This report caused an industry-wide selloff to end the week, and today, many of the biggest tech companies have seen their stock prices fall again.
Goldman first claimed that the “FANG” acronym is now obsolete, opting to rename the group of companies “FAAMG”— Facebook, Amazon, Apple, Microsoft, and Alphabet (GOOGL - Free Report) —as the most powerful and relevant firms in the tech space.
“While FANG has dominated investor focus, the nature of the acronym has expanded more broadly to encompass mega-cap tech,” Goldman analyst Robert Boroujerdi said. “Indeed, the bigger story in our view is FAAMG — Facebook, Amazon, Apple, Microsoft and Alphabet — a group of five stocks which have been the key drivers of both the SPX & NDX returns year-to date.”
The financial giant thinks the huge focus on FAAMG might cause problems. Goldman sees this possibility ramping up further as more and more passive investors get in on these currently low volatility stocks. “The fear is that if fundamental events cause volatility to rise, these same passive vehicles will sell and exacerbate downside volatility,” the note said.
Goldman’s note boiled down to the fact that the company thinks risks such as regulatory concerns and cyclical exposure will cause these tech stocks to become far less safe than many investors assume.
It’s worth noting that shares of Apple are down 2.61% after the company took another hit from analysts on Monday. A new report from Mizuho analyst Abhey Lamba downgraded Apple from a “buy” to “neutral.” On top of that, the firm lowered its price target from $160 to $150 and made it clear that investors could be putting too much stock in the power of the upcoming 10th Anniversary iPhone.
“We believe enthusiasm around the upcoming product cycle is fully captured at current levels, with limited upside to estimates from here on out,” the analyst said in a note.
Mizuho still thinks the iPhone 8 will be a strong performer for Apple. But the company does not believe the new smartphone can solve all of Apple’s current problems.
Nvidia (NVDA - Free Report) , the red-hot chipmaker, took one of the biggest hits last Friday, despite being left out of Goldman’s report. The company’s shares dipped on the back of the news that Citron Research took a short position. Citron referred to Nvidia as a “casino stock” and argued that its recent rally has gone too far (also read: Citron's Andrew Left Hammers Nvidia, Shares Dip).
Interestingly, shares of Nvidia are actually up marginally on Monday.
Despite the recent drops, the tech sector is still off to a roaring start to the year. According to our Zacks Sector Rank data, the overall “Computers and Technology” business has gained more than 19% year-to-date. It doesn’t seem like the time to jump ship on the whole technology sector, but maybe just take a step back and relax for a bit.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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Here's Why Tech Stocks Fell Again Today
For the second consecutive day of trading, shares of some of the largest technology companies on the planet—including Apple (AAPL - Free Report) , Facebook , Amazon (AMZN - Free Report) , and Microsoft (MSFT - Free Report) —dipped on Monday morning.
Last Friday, Goldman Sachs warned investors in a note that there are multiple potential unaccounted for dangers in the tech sector. This report caused an industry-wide selloff to end the week, and today, many of the biggest tech companies have seen their stock prices fall again.
Goldman first claimed that the “FANG” acronym is now obsolete, opting to rename the group of companies “FAAMG”— Facebook, Amazon, Apple, Microsoft, and Alphabet (GOOGL - Free Report) —as the most powerful and relevant firms in the tech space.
“While FANG has dominated investor focus, the nature of the acronym has expanded more broadly to encompass mega-cap tech,” Goldman analyst Robert Boroujerdi said. “Indeed, the bigger story in our view is FAAMG — Facebook, Amazon, Apple, Microsoft and Alphabet — a group of five stocks which have been the key drivers of both the SPX & NDX returns year-to date.”
The financial giant thinks the huge focus on FAAMG might cause problems. Goldman sees this possibility ramping up further as more and more passive investors get in on these currently low volatility stocks. “The fear is that if fundamental events cause volatility to rise, these same passive vehicles will sell and exacerbate downside volatility,” the note said.
Goldman’s note boiled down to the fact that the company thinks risks such as regulatory concerns and cyclical exposure will cause these tech stocks to become far less safe than many investors assume.
It’s worth noting that shares of Apple are down 2.61% after the company took another hit from analysts on Monday. A new report from Mizuho analyst Abhey Lamba downgraded Apple from a “buy” to “neutral.” On top of that, the firm lowered its price target from $160 to $150 and made it clear that investors could be putting too much stock in the power of the upcoming 10th Anniversary iPhone.
“We believe enthusiasm around the upcoming product cycle is fully captured at current levels, with limited upside to estimates from here on out,” the analyst said in a note.
Mizuho still thinks the iPhone 8 will be a strong performer for Apple. But the company does not believe the new smartphone can solve all of Apple’s current problems.
Nvidia (NVDA - Free Report) , the red-hot chipmaker, took one of the biggest hits last Friday, despite being left out of Goldman’s report. The company’s shares dipped on the back of the news that Citron Research took a short position. Citron referred to Nvidia as a “casino stock” and argued that its recent rally has gone too far (also read: Citron's Andrew Left Hammers Nvidia, Shares Dip).
Interestingly, shares of Nvidia are actually up marginally on Monday.
Despite the recent drops, the tech sector is still off to a roaring start to the year. According to our Zacks Sector Rank data, the overall “Computers and Technology” business has gained more than 19% year-to-date. It doesn’t seem like the time to jump ship on the whole technology sector, but maybe just take a step back and relax for a bit.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>