But hold on a moment — big tech might have another ace up its sleeve.
Solid earnings from these companies could mean another rally in tech stocks, according to Wedbush Securities analyst Daniel Ives.
“We believe (first quarter) earnings over the coming weeks will be a major positive catalyst for tech names,” given the sector’s robust fundamentals, Ives said in a note to clients last week.
And as tech stocks go, so goes the market, because they are among the biggest stocks in the major equity indexes.
Of course, it will be many months until we know how much of the pandemic-driven remote way of life that boosted tech company’s margins last year will continue once when the economy fully reopens.
A digital transformation is underway, and it could bring about the next multiyear rally for tech companies, according to Ives. That said, it might be tricky for investors to determine whether to put money into cybersecurity, artificial intelligence or cloud computing at this point.
“Today we estimate 35% of workloads are on the cloud with a doubling of workloads on the cloud expected by 2023,” he said.
So, although valuations for tech shares are sky high — even after the recent sell-offs — there is reason to believe that those stocks will continue to climb even higher. The growth prospects might just outweigh the high stock prices.
Of course, there are some clouds on the horizon for big tech as well.