The bubble that has lifted tech stocks to lofty new heights looks like it may be about to pop. Share prices in tech giants such as Facebook, Microsoft and Google’s parent company Alphabet all took a sharp tumble yesterday, increasing fears that investors may have placed their last chips in the tech industry.
Facebook was the worst affected, as its stock price plummet by 4.6 per cent eliminating nearly $20 billion of its market value and representing its worst day in nearly a year. Meanwhile other tech giants didn’t fair much better. Microsoft, Apple and Alphabet all lost more than 1 per cent off their share pieces.
Investment in the tech sector over the past 24 months has seen the S&P 500 index rise by 23 per cent in 2017, largely due to the big players. However there are now growing concerns that the tech industry has had its day in the sun with a quarter of the 68 technology stocks that make up the index recording recent drops of 10 per cent or more.
“There’s definitely some panic out there,” said Wedbush trader Joel Kulina. “Everyone is talking about rotation, it’s becoming one of those buzzwords.”
“I think we’re seeing more of a rotation out of some hot-flying tech names into small-caps, some of the names that may well benefit from tax cuts,” added Art Hogan, chief market strategist at Wunderlich Securities in New York.
Other tech favourites to be dumped by investors recently include Nvidia, down 4 per cent and Applied Materials, down 3.4 per cent.