To The Moon

The recent acceleration in revenue growth announced by major tech companies has sparked optimism among investors. As these tech giants continue to surge, there are indications that the bear market may be coming to an end. In this article, we will explore the impressive performance of large-cap tech stocks, the signs of a tech industry recovery, and what this means for investors.

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Tech Stocks Soaring:

The upward trajectory of large-cap tech stocks is hard to ignore. All three major indices have surged over 20% from their bear market lows, leading some experts to declare the arrival of a new bull market. The remarkable rebound in the stock market this year, especially in recent weeks, demands attention.

Unparalleled Market Influence:

When it comes to understanding market trends, there is no better place to look than the world of large-cap tech companies. We're talking about industry giants like $Apple(AAPL)$, $Microsoft(MSFT)$, $Alphabet(GOOG)$, $Amazon.com(AMZN)$, $Meta Platforms, Inc.(META)$, $NVIDIA Corp(NVDA)$ and $Tesla Motors(TSLA)$. With a combined market capitalization of approximately $10.5 trillion, these companies hold immense sway over the US economy. Their businesses span a wide range, including computers and smartphones, software, digital advertising, semiconductors, e-commerce, cloud computing, social media, electric vehicles, and artificial intelligence.

Impressive Performance:

The gains of these seven stocks have even surpassed the $NASDAQ(.IXIC)$ this year, with three of them doubling their market value. This achievement is truly remarkable considering their significant impact on both the stock market and the overall economy.

Moreover, the tech sector often serves as a leading indicator for the economy and the stock market. These companies are typically quick to cut expenses in areas such as digital advertising, software, and cloud computing, meaning their stocks tend to decline before the broader market and recover earlier. This trend seems to be reflected in the current market.

End of the Tech Recession:

Not only have large-cap tech stocks skyrocketed this year, but their underlying business performance also suggests that their worst times may be behind them. The wave of layoffs that impacted many of these stocks and smaller tech companies at the end of 2022 and the beginning of 2023 appears to have subsided. With past downsizing efforts, most tech firms are now leaner and more profitable, especially as they regain revenue growth.

First-Quarter Results:

The first-quarter earnings results further support the idea that the tech recession has come to an end, except for Tesla. While most companies experienced only modest revenue growth in Q1, it is the shift in the economic downturn that matters.

This is another sign that the worst phase of the tech recession is over, and the industry's overall bullish sentiment, particularly regarding artificial intelligence, supports its recovery.

Implications for Investors:

Given the significant price surges across all these stocks this year, their current valuations can be considered high. This reflects the market's belief that their earnings will soon catch up to justify these higher valuations. For instance, Apple and Microsoft are already trading at historic highs.

Overall, the surge in tech stocks and the improvement in first-quarter earnings indicate that, unless unforeseen events occur, the bear market has likely come to an end, regardless of one's specific definition of a new bull market.