Which Big Tech Stock to Pick First?

JacksNiffler
01-04

Obviously, the prominent big tech companies (the "Magnificent Seven") that performed well last year have started to pull back. The stacking of investors' trades often leads to more pronounced downward movements, as an increasing number of quantitative trades, including traditional active funds, have similar risk exposures in these big tech stocks, as well as similar factor exposures.

The valuation is certainly one of the important factors. After the crazy surge in 2023, the valuations of several major tech stocks are not low. However, in comparison, $Alphabet(GOOGL)$ $Alphabet(GOOG)$ $Amazon.com(AMZN)$ , and $Meta Platforms, Inc.(META)$ have relatively lower valuations, while the most popular $Apple(AAPL)$ and $Tesla Motors(TSLA)$ have relatively higher valuations.

Below are the changes in the price-earnings ratios (PE) of the Magnificent Seven over the past two years, comparing the PE over the past 12 months, the current year's PE, and the 5-year average PE.

So, it's not surprising that GOOGL and AMZN are also more resistant to declines these days.

Of course, for options traders, except for $NVIDIA Corp(NVDA)$ , using the 5-year average PE as a valuation support level can be beneficial for naked selling of PUT options, whether for earning option premiums or for the purpose of establishing or adding to positions.

Tech Stocks Pullback: What's Next?
After the start of the new year, tech stocks came under pressure, with IXIC dropping by 1.63%. NVDA witnessed a 2.73% decline, Meta fell by 2.17%, and both MSFT and AMZN experienced a drop of over 1%. ------------- Where might tech stocks pull back to? At whar price will you add tech stocks?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment
16