📈Are Mega Tech Stocks overvalued?

Mega Tech names have been driving the performance of the SP500 all year long. Mega-cap tech (AAPL, AMZN, GOOGL, META, MSFT) has collectively risen by 29% YTD, outperforming the S&P 500 by 23 pp and causing a sharp narrowing of market breadth. These stocks trade at a P/E of 25x, a 49% premium vs. the rest of the S&P 500. Mega-cap tech generated average annual sales growth of 15% from 2013 to 2019 vs. just 4% for the S&P 500. AAPL was the last heavyweight to report that was undeniably better than expected. On top of that AAPL issued a $90bn buyback which is larger than the market cap of 80% of SP500. (statistics per GS)

Mega-cap tech’s long-term growth prospects also potentially stand to benefit from advances in AI. AI could potentially drive roughly $7 trillion in global economic growth over 10 years and GS equity analysts estimate Generative AI Software TAM of about $150 billion. They highlight MSFT,GOOGL, AMZN, and META among the stock best-positioned to benefit from AI. MSFT used the noun “Artificial Intelligence” no fewer than 64 times on their earnings call last week. The market is clearly starting to push on companies with presumed disruption risk.

Despite the huge move in Mega-cap Tech we are at the median line for valuation in comparison to the rest of the SP500. The median is 1.5 which the high being over 2.2 and low being .8. We are far from being overbought by this metric.

AAPL broke the downward trend line(DTL) that developed in November 2021. MACD weekly continues to push higher which is bullish.

META attempting to close over the 200 SMA for the first time in two years.

MSFT is building a high tight flag under resistance . Usually this means its eating up supply. (bullish)

NVDA is 10% off the highs and setting up for its top 10 highest close on the weekly chart of all time.

GOOG attempting to break major resistance of $108.50

AMZN acts the worst of Mega-cap Tech names. We tested the pandemic lows, unable to have the MACD breech the zero line and below the 200 SMA.

Watch Below for a more in depth analysis. Pay attention to what is said about larger banks and IEP.

Wishing Everyone Massive Success!