The big tech companies reported market-beating results for the fiscal second quarter last week – a testimony that business remained strong in recent months. The lag in respective stocks, however, says investors were left unimpressed.

Nicholas Colas attributes the sell-off to weak guidance

DataTrek Research co-founder Nicholas Colas attributes the sell-off to investors’ focus on the future guidance that, except for Microsoft, came out dovish.

According to Colas, each of these companies faces unique challenges that are making investors nervous about the third quarter and beyond. For example, Apple’s iPad and Mac sales might take a hit due to the ongoing global chip shortage. Amazon, on the other hand, doesn’t have clarity on how people will shop in Q3? Would they stick to online or turn to physical stores now that the COVID-19 restrictions have eased?

On top of that, he added, Q2 was a fairly easy quarter to compare against. But moving forward, these companies are now coming up against harder and harder comparisons, further pushing investors into “taking a step back”.  

Here’s why Colas is still positive on the tech titans

Despite challenges, however, Colas himself is confident that the tech titans will maintain momentum in the third quarter.

“The most important thing going into 2022 is the earnings leverage. All these companies, except for Amazon, for obvious reasons, have very high incremental margins. So, whatever the economy does, whatever these industries do, these companies will continue to generate very high, outsized earnings,” he said on CNBC’s “Executive Edge”.

Colas further highlighted that, on average, all of these companies had grown their earnings power by an incredible 100% in the last 24 months. “Their earnings power is structurally higher and continuing to improve at a pretty fast pace,” he cited for his optimism about the tech giants.

The post Big tech stocks are lagging despite blockbuster earnings – here’s why appeared first on Invezz.



from USA – Invezz https://ift.tt/37cAb8Y
Wajeeh Khan
Click here to Join RICH DAD SUMMIT online with ROBERT KIYOSAKI - $1 Training for Passive Income: https://bit.ly/RichDadSummitWealthTraining