In an intriguing shift, the stock market today seems to sport a new narrative with the spotlight once again shining on big tech growth stocks. After a few months of being on the back burner, while cyclical and value stocks enjoyed their moment of glory, prominent technology giants appear poised to make a remarkable comeback.
Firstly, the driving forces behind this shift to big tech growth stocks require understanding. A couple of factors seem to be playing into this emerging trend. Firstly, as economies across the world hit reopening milestones with the rollout of COVID-19 vaccines, investors are looking to hedge against potential inflation. Big tech growth stocks are traditionally viewed as safe havens in times of economic uncertainty due to their strong balance sheets and consistent growth narratives, making them attractive in such scenarios.
Secondly, the accommodative stance taken by central banks worldwide, particularly the Federal Reserve, is supporting the move towards growth stocks. The decision to maintain interest rates and predictions for a slow increase over several years is encouraging confidence in the high-growth, long-duration cash flow companies, quintessentially, the big tech firms.
Among the big tech players starting to shine in the spotlight are Apple, Microsoft, Amazon, Google’s parent company Alphabet, and Facebook. Their returns over the past few months have been indicative of a comeback.
Take, for instance, the case of Apple. After months of sideways trading, Apple’s stock has seen some strong upward momentum. Amazon, too, recently hit record highs, driven by the news of a successful Prime Day and robust AWS growth forecasts. Meanwhile, Microsoft’s shares have been rallying, boosted by the company’s cloud business and its recently announced decision to expand into the healthcare industry.
Alphabet and Facebook, both bellwethers of the advertising industry, have benefitted from the pickup in digital ad spending, seeing their stock prices rise. Furthermore, the digital transformation wave sparked by the pandemic shows no signs of abating, putting big tech companies at the forefront of future growth.
Another crucial factor fuelling investors’ interest in big tech growth stocks is the innovative advancements these tech giants promise. Areas such as artificial intelligence, cloud technology, autonomous vehicles, and virtual or augmented reality are expected to be the next big frontier for growth. Companies like Apple, Amazon, Google, and others are heavily investing in these fields, signaling potential lucrative returns in the future.
However, it is worth noting that like any investment, buying into big tech growth stocks is not without risk. The heightened regulatory scrutiny these companies
