Silicon Valley Is Richer Than Ever: 4 Hot Tech Picks
Zacks Investment Research | Jun 04, 2017 10:27PM ET
The tech-laden Nasdaq Composite has been making a steady climb throughout this year, establishing a new record high at the close of Jun 2 session. In fact, computer and software makers are having a ball, with the tech sector turning out to be the best performer over the past three months. Tech has come a long way, evolving from the dot-com catastrophe to becoming a safety trade and are now favored by active managers.
The Nasdaq 100 Index also made a lot of noise, whose combined value has swelled by $500 billion in the first quarter, the highest since the tech bubble peak in 2000. While tech companies being less sensitive to both taxes and interest rates bode well for them, one-time tax on trillions of dollars held overseas will provide a necessary windfall for such companies who have hoarded money outside the U.S.
Thus, when it comes to the equity markets, Silicon Valley is richer than ever and investing in Internet and technology companies makes all the more sense now. But, if their high valuations are a concern, trust their profits to rise higher in the days ahead.
Nasdaq Closes at Record High as Tech Leads Gains
The Nasdaq Composite registered its second successive high close on Jun 2, a jump that has resulted in a gain of 17.1% for the index this year outperforming both the S&P 500 and the Dow Jones Industrial Average.
It’s been also a great year for the Nasdaq 100 index, which comprises about 58% of tech shares. The index is up 20.9% this year, pegged largely on the huge surge seen in a few big tech stocks. About 40% of the Nasdaq 100 is made up of the so-called “FANG” stocks and Microsoft (NASDAQ:MSFT), all of which has performed exceptionally well this year. In fact, returns of the FANG stocks alone account for more than a quarter of the S&P 500’s advance this year.
If we consider the “FAANGtastic five” – Facebook Inc (NASDAQ:FB) , Apple Inc. (NASDAQ:AAPL) , Amazon.com, Inc. (NASDAQ:AMZN) , Netflix, Inc. (NASDAQ:NFLX) and Alphabet Inc (NASDAQ:GOOGL) – each of them have gained between 25% and 34% this year. Amazon, in particular, topped the $1000-a-share level, highlighting the stellar show put up by tech stocks this year.
Investors Double Down on Tech Giants
Investors are doubling down on the hottest tech stocks this year, and it’s paying off handsomely. Funds tracked by Bank of America Corp (NYSE:BAC) own the highest percentage of tech stocks on record, after all the Technology Select Sector SPDR Zacks Investment Research
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