Technology

Thomas Rice, portfolio manager for the Perpetual Global Innovation Share Fund provides your weekly wrap of technology, innovation, and finance news.

A solid report card from the megatechs driving the US stockmarket but the market reaction was mixed as investors considered the figures from Apple, Amazon, Alphabet (Google), Facebook, and Twitter.

Friday morning just after 7am Australian time looms as the most important time for markets in quite a while. That’s when megatechs Apple, Amazon, Alphabet, eBay, Twitter, and Facebook are due to release their September quarterly reports.

Shares of Amazon.com, Google parent Alphabet, Facebook, and Apple fell Tuesday as a report emerged that a US House subcommittee that has investigated anticompetitive business practices for more than a year would recommend splitting them up and limiting the scope of their future acquisitions.

Corporate Connect research analyst Di Brookman provides a review of Telsa’s Battery Day. Pioneered by Elon Musk the company has ambitious targets that it hopes to achieve through a combination of superior design, manufacturing, and supply chain management.

Quietly, there’s no longer a $US2 trillion company listed on Wall Street, and all that chatter about Apple and the mega techs has gone silent as the evolving sell-off in tech stocks crunches the top end of the market.

The continuing weakness in major tech stocks dragged Wall Street lower on Friday, setting up another nervy week for investors. US technology shares sold off for the third day in a row, while all three major US indexes posted a third straight week of declines.

According to the latest Bank of America’s fund manager survey, 80% of the 234 respondents reckon the Megatech sector is too crowded – in fact, they say its “the most crowded trade” ever in the market.

Apple moves into the spotlight this week – not for the benefits or otherwise of the four for one share split last week, but for the annual reveal session for some of its key products.

Gee, that didn’t last long. Apple briefly became a $US2 trillion company on Wall Street on Wednesday.

M&A moves for Microsoft and Apple had all three US indices on the rise last night. Dow up 236.

Weak economic data had Wall Street heading south but for Big Tech names, which after the bell have blown away earnings forecasts. Dow down -225.

Early futures trading shows Nasdaq will open tonight on Wall Street up more than 2% as the big four tech giants, Apple, Amazon, Alphabet (Google) and Facebook reported solid or spectacularly good June quarter results.

With tech valuations still stretched against the background of climbing COVID-19 infection rates, all eyes this week will be on quarterly reports and guidance from Apple, Amazon, Facebook, and Alphabet.

The small crack in the level of confidence in the Megatech sector widened on Thursday when streaming video giant revealed a sharp fall in its forecast for new subscribers in the September quarter.

In the space of four or five months, Zoom has gone from just another tech stock with a video product similar to offerings from bigger companies like Microsoft, Apple, and Google, to the market leader and standard to which the others are now compared.

Netflix shares continued their record rise last week ahead of the release of the streaming video giant’s second-quarter figures on Friday morning, Sydney time. Besides Netflix, the coming week also will see the five big US banks report and set the tone for the non-tech side of the reporting season.

The Dow and S&P 500 fell Wednesday afternoon for a second day, even though the Federal Reserve pledged to keep its ultra-easy monetary policy in place until 2022 at least. The falls though didn’t include the Nasdaq which is off on another surge and closed over 10,000 points for the first time.

This week I am here to push forward the view that this resurgence will evolve into one of the biggest bubbles in history. It is important that investors appreciate the changing dynamics and put aside the media headlines, employment stats and other negative data and understand the financial market consequences (not economic) that will result.