To The Moon

Next week is a busy one, as $Microsoft(MSFT)$  , $Alphabet(GOOG)$  , $Meta Platforms, Inc.(META)$  and $Tesla Motors(TSLA)$ will be kicking off the quarter earnings releases by the big techs. Being growth stocks, their price movements are highly sensitive to interest rates and their stock prices have been inflated by expectations on rate cuts early this year. However, the expectations have since dimmed on the back of a sticky inflation that has threatened the economy with interest rates staying higher for longer. From hard-landing to soft-landing, the market is now increasingly betting on no-landing, with inflation remaining above the 2% target that the Fed would be comfortable with while the economy remains robust.

Hence, the big techs will need new catalysts to drive their stock prices higher. And I believe they have found one led by $NVIDIA Corp(NVDA)$  in artificial intelligence which the big techs are leveraging to build into their various products and services from AI-powered search engines, enterprise productivity software to social media and auto pilot. With artificial intelligence being all the rage these days and its applications increasingly ubiquitous, AI has since become the latest growth engine for the big techs.

While attention will be on earnings growth from their AI investments and their latest earnings are likely to be scrutinised for justification of their elevated stock prices, which may plummet on the slightest miss, I remain confident of the resilience of these big techs, given their strong balance sheets and sound fundamentals. Continual robustness of the US economy coupled with expectation of a Fed pivot later this year should lift their valuations as the tech titans continue to grow from strength to strength.

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