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June 19, 2017, 9:34 a.m. EDT

Don’t fall for it — Apple, Netflix and the other big-name tech stocks are just playing dead

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By Shawn Langlois, MarketWatch


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Don’t worry... everything will be fine.

FAANG, FANG, FAAMG, OMG!... whatever your favorite tech acronym, it’s been a tough slog lately for the darlings of the stock market.

Since banging out a record high on June 8, the Nasdaq /zigman2/quotes/210598365/realtime COMP -0.86%  is down almost 3%, hobbled by declines in juggernauts like Netflix /zigman2/quotes/202353025/composite NFLX +0.46% , Apple /zigman2/quotes/202934861/composite AAPL -1.40%  and Amazon /zigman2/quotes/210331248/composite AMZN -1.21% .

Is that the terrifying sound of the bubble popping?

Not if the Barron’s weekend cover story is to be believed. No, our call of day suggests this has merely been the pause that refreshes. A hiccup.

The reasoning? The sector’s earnings growth will continue to strengthen “as technology burrows into nearly every aspect of the economy, from consumer products to commercial and industrial applications.”

Specifically, Apple’s upcoming iPhone 8, Facebook’s  push toward two billion monthly active users and Amazon’s clear designs on conquering the world (more on that below) will all emerge as drivers in the next leg up for tech stocks.

“We might not like that these companies have gotten so big and so dominant, but they are reaching global audiences in ways that we’ve never seen any company do,” Dan Chung, CEO of asset manager Alger, told Barron’s.

And they’re still cheap. Relatively speaking.

The tech sector traded at 70.1 times trailing fourth-quarter earnings during its 2000 peak. Nowadays, that number is merely 23.9 times trailing earnings. Put that up against the 21.6 times multiple on the S&P /zigman2/quotes/210599714/realtime SPX -0.65% , and it doesn’t seem so out of whack.

So up and away, right?

Key market gauges

It’s a risk-on kind of day, at least in the early going. The Dow /zigman2/quotes/210598065/realtime DJIA -0.39%  and the S&P /zigman2/quotes/210599714/realtime SPX -0.65%   are up and techs /zigman2/quotes/210598365/realtime COMP -0.86%   are taking off. Europe /zigman2/quotes/210599654/delayed XX:SXXP -0.15%  is having an upbeat day, helped by French parliamentary election results. Asia markets /zigman2/quotes/211618636/realtime XX:ADOW -0.94%  closed higher. Gold  is off, while crude oil futures  are up.

Read the latest in Market Snapshot

Bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.12%  prices have stabilized a bit since that big pullback last week. But the volatility probably won’t be gone long.

Read: Stay away from bitcoin — it’s complete garbage.

The chart

Obviously, the Amazon/Whole Foods  buzz will likely ring out for the foreseeable future. And Michael Batnick of the Irrelevant Investor served up this timely reminder of how Jeff Bezos managed to achieve such astonishing growth: By focusing on sales and not getting caught up in the critics focusing on the losses.

/zigman2/quotes/210598365/realtime
US : Nasdaq
11,383.56
-98.89 -0.86%
Volume: 3.14B
Dec. 2, 2022 2:09p
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/zigman2/quotes/202353025/composite
US : U.S.: Nasdaq
$ 318.40
+1.45 +0.46%
Volume: 8.91M
Dec. 2, 2022 2:09p
P/E Ratio
28.55
Dividend Yield
N/A
Market Cap
$141.05 billion
Rev. per Employee
$2.79M
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 146.24
-2.07 -1.40%
Volume: 35.55M
Dec. 2, 2022 2:09p
P/E Ratio
24.02
Dividend Yield
0.63%
Market Cap
$2359.33 billion
Rev. per Employee
$2.40M
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 94.34
-1.16 -1.21%
Volume: 43.69M
Dec. 2, 2022 2:09p
P/E Ratio
86.83
Dividend Yield
N/A
Market Cap
$974.26 billion
Rev. per Employee
$312,308
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
4,050.07
-26.50 -0.65%
Volume: 0.00
Dec. 2, 2022 2:09p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
34,259.70
-135.31 -0.39%
Volume: 0.00
Dec. 2, 2022 2:09p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
4,050.07
-26.50 -0.65%
Volume: 0.00
Dec. 2, 2022 2:09p
loading...
/zigman2/quotes/210598365/realtime
US : Nasdaq
11,383.56
-98.89 -0.86%
Volume: 3.14B
Dec. 2, 2022 2:09p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
443.29
-0.67 -0.15%
Volume: 0.00
Dec. 2, 2022 5:50p
loading...
/zigman2/quotes/211618636/realtime
XX : Dow Jones Indices
3,267.26
-31.15 -0.94%
Volume: 0.00
Dec. 2, 2022 12:44p
loading...
/zigman2/quotes/31322028/realtime
US : CoinDesk
16,951.59
+20.19 +0.12%
Volume: 0.00
Dec. 2, 2022 2:09p
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