RSP - It Is Time For Technology To Give Up Its Leadership Position
2024-04-25 09:15:03 ET
Summary
- Meta Platforms disappoints with Q2 outlook, raising concerns about valuations in the technology sector.
- Stocks like Meta that trade at a premium to the market face a violent reaction if growth slows, a trend we may see across the Magnificent 7.
- The rate of earnings growth for the Magnificent 7 is forecasted to slow, while expectations for the remaining 493 stocks are improving, favoring diversification and new sector leadership.
Stocks were relatively flat yesterday after a strong two-day rally, as investors remained guarded about what the largest technology companies would have to say regarding their prospects for the rest of this year. It looks like that apprehension was warranted, as Meta Platforms ( META ) disappointed last night with an outlook for the second quarter that fell short of analysts’ estimates. It also plans to spend more than previously thought on AI, which is not central to the company’s core advertising business. That is what pays the bills. This has some investors concerned that CEO Mark Zuckerberg is losing his focus, as critics claim he has on technological bets like Metaverse and Reality Labs. I am more concerned about another issue....
It Is Time For Technology To Give Up Its Leadership Position