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Why Big Tech's dominance could be a double-edged sword for the market
Why Big Tech's dominance could be a double-edged sword for the market

Axios

time6 days ago

  • Business
  • Axios

Why Big Tech's dominance could be a double-edged sword for the market

Thank Big Tech for helping power the S&P 500 to its eighth record high of the year. That dominance could also be the market's biggest vulnerability. Why it matters: Nearly half of the S&P 500's earnings growth this year is coming from tech. That kind of concentration raises the stakes — and the risk — if the sector falters. What they're saying:"The whole vibe on the current tech stonks conversation reminds me ... a lot of dot com before the crash," wrote Patrick Moorhead, founder of Moor Insights & Strategy, in a post on X. "Instead of [Nvidia] we were piling money into [Cisco]," Moorhead wrote. Catch up quick: The turn-of-the-century dot-com bubble — when hype drove a surge in tech stocks, which burst when earnings didn't justify valuations — is a cautionary tale that investors would be wise to remember. Cisco is one of the poster children for the bubble, and often draws comparisons to Nvidia, which just became the first $4 trillion company. At its peak valuation, Cisco traded at 200 times forward earnings. Nvidia is less than 40 right now, with the profit growth to back it up. 💭 Thought bubble, from Axios Pro Rata author Dan Primack: It's not just public companies, either. Venture capitalists mostly agree that they overspent and overvalued between 2020 and 2022, leading to a glut of stranded unicorns. 2025 is looking like a replay, with stratospheric startup valuations that often eclipse the ZIRP era. Median U.S. VC deal valuations are higher so far in 2025 than during the peak, save for a slight decrease for Series D+ rounds, per PitchBook. What we're watching: Sky-high startup valuations mirror the eye-popping valuations of some Big Tech firms — the Magnificent Seven ETF (MAGS) trades at 73 times earnings. Still, tech stocks could go up another 10% in the second half of the year thanks to the tailwind of AI, according to Wedbush analyst Dan Ives. Yes, but: Elevated prices don't necessarily mean we're in bubble territory. Unlike the early 2000s, today's tech giants have earnings and cash flow to back up their valuations, Sanctuary Wealth's chief investment strategist Mary Ann Bartels tells Axios. The bottom line: The question is whether the tech rally is happening because of investors hyping up stock prices, or because of strong earnings that demand these higher multiples.

Trending tickers: Nvidia, Intel, Apple, Antofagasta, and WPP
Trending tickers: Nvidia, Intel, Apple, Antofagasta, and WPP

Yahoo

time09-07-2025

  • Business
  • Yahoo

Trending tickers: Nvidia, Intel, Apple, Antofagasta, and WPP

Shares in Nvidia (NVDA) ticked 1% higher in Tuesday's session to close at a fresh high of $160 per share. The rise in share price came despite US president Donald Trump teasing that tariff announcements around chips would be made in the weeks ahead. Nvidia shares have rebounded from their April lows and are now up 19% year-to-date. Read more: Stocks rise and US copper prices hit record high as Donald Trump threatens 50% tariff Speaking to Yahoo Finance on Monday, Patrick Moorhead, CEO at Moor Insights & Strategy, said that since the April low "a lot of risks were taken down" around the stock. "And for the first time, this gear of the potential next wave of Industrial AI, investors are starting to see the correlation, the potential upside," he said. IPhone-maker Apple (AAPL) is in talks to buy the US rights to screen Formula 1, the Financial Times reported on Wednesday, which comes off the back of the success of its film based on the race car series. Citing people familiar with the discussions, the FT reported that Apple will challenge Disney's (DIS) ESPN for the broadcast contract when it becomes available next year. Apple's F1 film, starring Brad Pitt, has reportedly generated around $300m at the box office, making it the company's highest grossing film. Read more: Gold slips to lowest in over a week as Trump tariff threats push dollar higher The tech company was also in focus due to news around senior staff changes. Bloomberg reported on Tuesday that Apple's top AI models executive, Ruoming Pang, was leaving the company for Meta (META). A spokesperson for Apple had not responded to Yahoo Finance UK's request for comment at the time of writing. In addition, Apple named Sabih Khan as the company's new chief operating officer, to take over from Jeff Williams at the end of the month. Another chipmaker in the spotlight is Intel (INTC), with its shares surging more than 7% on Tuesday, after it was reported that the company was planning to make more layoffs. Bloomberg reported on Tuesday that Intel was cutting more than 500 positions in Oregon, as part of plans that would ultimately impact 20% of the company's staff. A spokesperson for Intel had not responded to Yahoo Finance UK's request for comment at the time of writing. The news comes as Intel's recently-appointed CEO Lip-Bu Tan seeks to turn the chipmaker around. Last week, it was reported that Tan was considering a major shift in the chip manufacturing process. Reuters reported that the CEO was looking at scrapping the American chipmaker's 18A manufacturing process. Instead, Intel is reportedly exploring a change to a contract manufacturing business, which it says would mean offering outside customers a newer generation of technology. Reuters reported that analysts believe this process would be more competitive against TSMC (TSM, in aiming to land key customers such as Apple (AAPL) or Nvidia (NVDA). On the London market, copper miner Antofagasta was the second biggest faller on the FTSE 100 (^FTSE) on Wednesday morning, after Donald Trump announced that he would hike tariffs on the metal. Trump said in a cabinet meeting on Tuesday that he would raise duties on copper. 'Today we're doing copper,' Trump said before turning to commerce secretary Howard Lutnick, who confirmed that the rate will be 50%. Stocks: Create your watchlist and portfolio The move will match the current 50% tariffs on two other commodities — steel and aluminium. Dan Coatsworth, an investment analyst at AJ Bell (AJB.L), said: "The drip-drip of tariff information threatens to increase investor frustration as many people would rather get all the bad news out of the way in one go, so they can get a clearer idea of the lay of the land." The biggest faller on the FTSE 100 (^FTSE) on Wednesday morning was WPP, with shares in the advertising agency tumbling more than 16%. It came after the company lowered its profit guidance for the first half. WPP said that against a challenging economic backdrop, it had seen a deterioration of performance as the second quarter progressed and expected first-half like-for-like revenue, less pass-through costs, to decline by between 4.2% and 4.5%. Read more: Stocks that are trending today The company expected headline operating profit for the first half to be in the range of £400m to £425m. Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said: "WPP's start to the year was poor, and its first-half performance fell short of its original underwhelming guidance. "To make matters worse, the new business pipeline is drying up, with performance in June being worse than WPP expected. There's not likely to be much let-up over the second half either, so the group's going to need new ways to engage clients and protect margins." Read more: How your health can affect your pension How to start investing with an employee share scheme What are premium bonds and what are the odds of winning?Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Nvidia stock: Why investors are bullish again
Nvidia stock: Why investors are bullish again

Yahoo

time07-07-2025

  • Business
  • Yahoo

Nvidia stock: Why investors are bullish again

Nvidia (NVDA) stock has rebounded from April lows as investor concerns around tariffs, China, and artificial intelligence (AI) capital expenditure (CapEx) risks have eased. Patrick Moorhead, founder, CEO, and chief analyst at Moor Insights & Strategy, joins Market Domination Overtime to explain why optimism around industrial and enterprise AI is keeping demand and spending alive. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. Let's begin with Nvidia. Big run off the April low. A name a lot of people know. A name a lot of people watching right now, certainly own. What explains that move off the April low? Yeah, so a lot of risks were taken down, you know, it was screaming for so long and then tariffs hit, uh, China hit, uh, potential GDP concerns, even questions about capex. And nearly all of them just completely evaporated and came off the table. So the risk is lower in the perception with investors. And for the first time, this year, this year of the potential next wave of Industrial AI, investors are starting to see the correlation, the potential upside. You mentioned capex, which is an interesting point because there were some skeptics we had on the show who were arguing perhaps that maybe 2025 is going to represent some sort of high mark, some sort of peak in AI capex, and that was bad news for the likes of Nvidia. Do you buy that? Uh, I don't, but I do think the growth will be tempered, right? Well, we see 10% growth, 20% growth likely. We won't be seeing 50% growth. But the other, the only thing that could change my mind on that is I'm doing a little bit more research on the industrial edge and also enterprise AI because as AI gets permeated into everything, into businesses, on premises, and even in the industrial edge, somebody is going to have to pay for that equipment. And if it's not going to be who you might expect, let's say the carriers, uh, the folks who are out there investing in it today, other companies might have to come in, let's say the hyperscalers go after that.

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