Alphabet Inc. also surged 12%, its strongest weekly gain since 2021. Amazon.com Inc., meanwhile, jumped 9.1% and Apple Inc. rose 4.4%. The tech-heavy Nasdaq 100 gained 5.8% on the week, its best week since November, and far stronger than the S&P 500 Index’s 1.4% advance. That divergence represents the biggest one-week outperformance by the Nasdaq 100 since the financial crisis in October 2008.
“Tech is more of a safe haven than your traditional cyclical sectors, and it has already gone through a re-pricing, which means it looks attractive relative to the rest of the market,” said Sam Stovall, chief investment strategist at CFRA.The idea that big tech is safer has fueled the investor rotation, especially as turmoil in the financial sector — sparked by the collapse of Silicon Valley Bank and Signature Bank — underlines the perception of risk elsewhere in the economy. The KBW Bank Index, which tracks 22 of the largest US lenders, sank almost 15% this week, adding to last week’s 16% plunge, which was its worst since March 2020.
In contrast to that uncertainty, major technology and internet stocks offer investors something close to stability in the current market, as their durable revenue streams and market dominance suggest they could be relatively insulated from any economic downturn. At the same time, their strong balance sheets — along with valuations that were heavily compressed in last year’s selloff — suggest less downside potential than other areas of the market.
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“In addition to lower Treasury yields, which has improved tech’s intrinsic valuation, investors are already looking out to 2024, where tech’s prospects for earnings growth is positive,” Stovall said.