More than two-thirds of the 914 surveyed by MLIV Pulse think that Tech company profits will disappoint the market throughout 2022. Companies risk advertisers cutting spending as the global economy struggles, while streaming services face an exodus of price-sensitive subscribers with consumers tightening their belts.
These two elements respond to the recession fears that some investors see in the face of the persistence of high interest rates, which pursue the objective of curbing inflation, but can generate a freezing of economic activity due to the increase in the cost of financing.
Besides, the inflationstill present in many countries despite their monetary policies, adds pressure on the cost of living of citizens, particularly in Europe, which is going through historical price levels that led to the European Central Bank point out that there will be a new increase in rates: “The situation will get worse before it starts to improve,” said the president of the entity, Christine Lagarde in an appearance in the European Parliament. They also expect prices on the continent to remain above 2% in 2024, driven by energy and food.
The Nasdaq 100 down 31% so far this year, wiping out trillions of dollars in market value, as investors reassess the post-pandemic value of many business models. retailers like Amazon are finding that some of their responses to the Covid-19 pandemic, as massive investments in warehouses and workers to pack products in them, are coming back to bite them. One of the large logistics companies in the United States, FedEx, warned of seeing a freeze in activity due to the drop in demand.
Apple said it will increase the price of your purchases in the App Store in Asia and the countries that use the euroas the value of foreign currencies collapses relative to the dollar. microsoft lowered its forecast due to currency strength in June. Sony warned investors about the impact of the global economic slowdown, especially in Europe, and the adverse effects of the strength of the dollar on its financial results.
Tech’s earnings are expected to lag the S&P 500 in the third and fourth quarters. Earnings on IT stocks forecast to fall 6.6% in the third quarter, compared with a 3.2% gain for the broader S&P 500, according to data from Bloomberg Intelligence. The Nasdaq 100 12-month forward EPS has fallen about 2.9% since June 1, compared with a 0.8% decline for the S&P 500.
Retail and professional investors are also bassists in the metaverse. more than 70% of respondents of MLIV Pulse said that they knew what the metaverse was, but that it won’t change the way they interact with people and companies in the next two years. The sentiment doesn’t fit with the way Mark Zuckerberg described the potential of the metaverse as “the next frontier” when he changed the name of his company from Meta (Facebook).
The company said investments in Reality Labs, the division that makes hardware, cut operating profit by $10 billion in 2021. Many technology companies, both large and small, have big ambitions for the metaverse. However, despite the promise of industry leaders, lMLIV respondents are unenthusiastic about its potential.
On the positive side, it is likely that technology companies that focus on sustainable and energy efficient products benefit from the energy crisis unprecedented in the wake of the Russian invasion of Ukraine. After Russia restricted supplies of natural gas to highly dependent neighbors, electricity prices have risen to record highs and governments are grappling with a potential economic collapse. In the case of Europe, the impact is particularly profound and governments promote energy saving measures while trying to alleviate the cost of energy on the cost of living of citizens through the freezing of tariffs for consumers or industries.
For investors, high electricity bills and fuel shortages drive the development of green solutions. 63% of those surveyed said they believed an oil and gas crisis would encourage the development of sustainable electronics. “If we had invested more in energy efficiency and invested more in renewable energy, we would be in a better position,” he said. Rachel Kyte, dean of the Fletcher School at Tufts University, in a Bloomberg TV interview.
“The nearly five-fold increase in gas prices in Europe over the last 12 months is providing a nice tailwind for clean energy equipment providers with companies like SolarEdge or Enphase on track to increase sales by more than 50%. % this year,” senior clean energy analyst Rob Barnett.
A third of those surveyed said that planned to increase their exposure to tech stocks, just under a third said they would reduce it and the rest said they would stay stable for the next six months. The technology remains attractive on some metrics, such as price-earnings ratio current compared to his 10-year average, while companies like Apple remain big cash generators. Technology remains the largest sector in the S&P 500, accounting for almost 27% of the index.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
