Stock market: Google, Apple, Amazon… will the Nasdaq disappoint for years?

Stock market: Google, Apple, Amazon… will the Nasdaq disappoint for years?

Amazon, Facebook, Alphabet (parent company of Google)… The shares of high-tech giants have had a bumpy ride… and a clearly downward trajectory over the past year, against a background of soaring long-term rates (bonds from ‘State), a particularly harmful phenomenon for growth stocks (a segment where technological shares are ranked, of which the Gafa are the standard bearer). “The Gafam / Fang (M for Microsoft and N for Netflix, editor’s note) corrected on the stock market by more than 40% compared to their high point reached in 2021. In 2022, Alphabet corrected by 40%, Amazon and Netflix in order by 50%, Meta and Tesla by 65%”, points out in this regard Neuflize OBC. Do these historic underperformances on the stock market of Nasdaq stars provide an opportunity for an equity investor to buy at a friendly price? Nothing is less sure…

Indeed, as Neuflize OBC and Bernstein point out, technology stocks remain expensive overall despite the sharp deflation in stock market prices, including from a historical perspective. After taking advantage of excessive enthusiasm on the stock market due to the generally positive impact of the Covid-19 crisis, the bubble in technology stocks has burst. And this, while the action of the central banks from 2020 had favored a rush on equities and in particular on the Gafa – relatively less sensitive to the shock on economic growth, while the confinements had favored the use of financial services. Amazon or Netflix, and that the rise of telework had boosted cybersecurity needs, etc.


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And despite price levels offering valuation multiples (equity expensiveness gauge) significantly lower than a year ago (and again, the surge in long-term rates justifies the sharp fall in equity prices , from a fundamental perspective), tech stocks could disappoint over the next 5 years, Bernstein warns.

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Indeed, their valuation multiples remain – on average – still relatively high (in a historical perspective, over the last 20 years), while the growth in the turnover of high-tech heavyweights listed on Wall Street such as Microsoft, Amazon, Facebook, Alphabet and Apple are likely to disappoint (it should be lower than that of the US equity market taken as a whole in 2023 and not higher in the following years).

While technology stocks represent a large share of shares listed on Wall Street (their weight is much lower on European stock markets), this scenario of a disappointing performance on the stock market for several more years would be “connected” with that of a end of Wall Street’s outperformance against European equities, a phenomenon observed since the 2008 financial crisis, but which is now showing tangible signs of fatigue and reversal, as shown by the technical analysis of the evolution the S&P 500 ratio on Stoxx 600 (i.e. the evolution of American equities compared to European equities), which clearly broke the ascending support constituted by the 100-week moving average (rising blue curve on the chart).

S&P 500 / Stoxx 600 and technical analysis Bloomberg Finance

Equities in the Old Continent, which have recently benefited from the reopening of China, cheaper valuations than on Wall Street and the marked reduction in tensions on energy, could thus continue, as a trend, to hold the American equities high and outperform…


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