To The Moon

Big-Tech’s Performance

Markets were volatile this week, with panic reaching a set point on Monday, recessionary trading taking over with poor nonfarm payrolls data, overlaid with a strengthening yen, exit from the arbitrage trade, and potential geopolitical events, leading to sharp pullbacks in global collared indices, and then a rebound after excessive panic, and Thursday's "looks OK!The broader market took a breather with Thursday's "looking good" jobless claims data.

Through the close of trading on August 8, big tech companies have also been volatile over the past week.The best performer was $Meta Platforms, Inc.(META)$ +2.39% which gave investors confidence after earnings, while the rest closed lower, $Apple(AAPL)$ -2.31%, $Microsoft(MSFT)$ -3.46%, $NVIDIA Corp(NVDA)$ -3.88%, $Alphabet(GOOG)$ $Alphabet(GOOGL)$ -5.11%, $Tesla Motors(TSLA)$ -8.31%, and $Amazon.com(AMZN)$ -9.31% due to last week's earnings overlay.

Big-Tech’s Key Strategy

Can current valuations hold up Big Tech?

With the release of Big Tech's Q2 earnings, the market has largely completed its revaluation, as well as position adjustments.In terms of profit multiple valuations for Mag 7 as of the 8.8 closing price, the highest PE for the 12 consecutive months is TSLA at 99x and the lowest is GOOGL at 22x.

AAPL: PE(TTM) is 32.5x and Forward PE projected at Consensus EPS in 2024 is 31.8x, or an implied 2% upside; and the PEG jumped from 2.3x to 3.6x as the growth rate declined, not a good sign, but the current deal adds in the expectation of growth from the release of the new AI machine.

MSFT: PE (TTM) is 34.2x, and Forward PE projected at 2024 Consensus EPS is 30.4x, or an implied 12% upside; and as growth rate rises, PEG falls from 2.0x to 1.9x.Microsoft is still relatively stable.

GOOGL: PE (TTM) is 22.9x, the lowest of all big techs, and Forward PE of 20.47x projected on Consensus EPS in 2024 is also implying a 12% gain; and PEG declines from 1.4x to 1.3x as growth rises.Google trades relatively cheaply, and implicitly, the market is concerned that search advertisingconcerns about possible market capture by AI.

AMZN: PE (TTM) is 38.9x, and Forward PE projected at Consensus EPS in 2024 is 28.57x, or an implied 36% upside; and the PEG declines from 1.0x to 0.8x as growth rises.Amazon's profits are more volatile, and so the current deal also incorporates expectations of future growth declines.

META: PE (TTM) is 24.7x, and Forward PE projected with Consensus EPS in 2024 is 23.7x, which is also an implied 4% increase; the growth rate is basically the same as the market's expectation, so the PEG stays around 1.1x. META's social media advertising business also performs strongly among its peers, and the market's relative recognition of its AI realizing ability is also relatively safe.META's social media advertising business is also strong among its peers, and the market has relatively recognized its AI cash flow ability, so its valuation remains in a stable range and is relatively safe.

NVDA: PE (TTM) is 61.1 times, with Consensus EPS in 2024 to the projected Forward PE of 38.9 times, is also an implied 57% rise; the market ate more thoroughly on its growth, PEG from 1 times down to 0.8 times.NVDA after the end of the 2024 PE is actually not too high in big tech, while the 2025Expected growth rate, in fact, PE can also return to below 30 times, but now the market is also worried about AI growth prematurely into the inflection point, so that no matter whether PE multiples or PEG multiples, is a huge blow, will appear to be a higher valuation, so the pullback is also considered violent.

TSLA: With a PE (TTM) of 99x and a Forward PE of 84x projected on Consensus EPS in 2024, it is undoubtedly the most expensive of the big techs, which is dictated by the nature of its industry, and the market's focus on the Tesla deal is more on the imaginative future of the business.

Big-Tech Weekly Options Watcher

As the flag bearer of this round of tech bull market, NVDA's performance best reflects the market sentiment.During the pullback, NVDA's volatility has also been quite dramatic, with up and downs of 6% not uncommon.And options players love this kind of market, with elevated IVs becoming more attractive to sellers and more frequent trades by buyers.

The number of unusual options this week is high, and if we look at the overall numerical performance of options, investors have the largest positions for several trading days on August 16 (monthly options), August 23, and August 30, with Call at 105-115 and PUT at 90-100, respectively, which implicitly implies the market's expectations.

Big-Tech Portfolio

The Magnificent Seven form a portfolio (the "TANMAMG" portfolio) that is equally weighted and reweighted quarterly.The backtesting results are far outperforming the $S&P 500(.SPX)$ since 2015 with a total return of 1,864%, while the $SPDR S&P 500 ETF Trust(SPY)$ has returned 210% over the same period and continues to pull back.

With the broader market pullback this week, the portfolio has returned 24.18% year-to-date, outperforming the SPY's 12.35%.

Over the past year the portfolio's Sharpe Ratio has fallen back to 1.5 compared to SPY's 1.2 and the portfolio's Information Ratio is 1.1.