Microsoft stock is up 45% so far this year.
Gerard Julien/AFP via Getty Images
After Big Tech stocks’ parabolic run, the debate now is whether to hold them or fold them. Strategists at
argue that the shares look more like sells.
The question comes up because
(GOOGL) have seen their stocks soar between 40% and about 200% this year. That has catapulted the
Index to a gain of almost 40%.
For Nvidia, fueling the surge have been expectations that advances in artificial intelligence will expand demand for the company’s semiconductors. Microsoft, an investor in OpenAI, the creator of ChatGPT, is expected to benefit not only from incorporating the technology into its Bing search engine, but also from layering AI into its cloud offering, helping to expand the market for it. For the internet, AI enhances Google and Meta’s advertising offerings, making them more compelling to brands.
All that optimism has lifted valuations—the stocks’ prices relative to the per-share earnings they are expected to deliver over the near term. Investors are paying up because they expect profits to grow for many years.
Valuations are a key part of the argument for selling now. Barron’s recently argued that tech multiples aren’t so expensive when adjusting them for the earnings growth Wall Street expects. But a…