Google and Amazon are as American as peanut butter and jelly sandwiches. They are pillars of the tech industry, according to some techno freaks. Amazon has taken over the retail business, and the company has its eyes on other businesses and so does Alphabet. But the third quarter earnings figures from those companies are giving investors a nervous feeling. In fact, tech stocks in Europe are taking it on the investment chin. That new development could mean the U.S. tech industry is in for an adjustment. The seemly unstoppable growth of tech stocks may be stoppable in this market cycle.
There’s a lot of hot money in Facebook, Amazon, Alphabet (Google), and Netflix, according to Christopher Peel. Peel is the chief investment officer at Tavistock Wealth. Peel If those companies don’t hit earnings projections this year that hot money is going to move somewhere else, according to Peel. But investors aren’t sure where that somewhere else is. There’s volatility in all segments of the U.S. stock market.
If Amazon starts to feel the effects of Trump’s trade war, and some investors say that’s a given, then the retail segment of the economy will suffer. Amazon may be feeling the impact of the trade war now. But the Feds interest rate hikes aren’t giving Amazon or Google any relief. And a strong U.S. Dollar plays against Amazon in the global market.
The whole tech industry isn’t in trouble, but there is a value adjustment coming and the tech companies like Alphabet and Amazon will definitely feel the draft from that value adjustment that is forming across the globe. But there are bright spots in the tech industry.
Even though Amazon and Alphabet earnings are not hitting investor expectations they are still are giants in the tech world. And they will continue to put smiles on the faces of their investors. Even Tesla investors may start smiling once Elon Musk’s Model Y SUV goes into production. Musk wants to debut the Model Y in 2020. Plus, Elon’s shaky tech company has a roadster on the drawing board, and a $35,000 Tesla Model 3 is less than six months away.