Technology stocks rebounded strongly after experiencing a worst weekly loss since October as investors have again started focusing on growth stocks. Last week’s selloff is blamed on Reddit mania.
Meanwhile, the market analysts believe tech stocks have significant upside potential ahead because investors have been ignoring bolstering earnings performance from the big tech giants.
Apple (NASDAQ: APPL) and Microsoft (NASDAQ: MSFT) have reported record results for the December quarter and full year while Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOG) is set to post record quarterly numbers today.
“We believe lost in this Twilight Zone week has been the eye-popping earnings strength seen out of the tech space with robust tech results across the board led by Apple and Microsoft as the cloud and iPhone supercycle thesis are playing out in the field,” told the representative of a privately held financial services and investment firm Wedbush Securities.
Several high growth tech stocks fumbled at a high single-digit rate last week and that provides a buying opportunity for 2021, according to Wedbush.
Investors have capitalized on the buying opportunity as the tech-heavy Nasdaq index soared almost 2.5% in Monday trading and added to gains on Tuesday.
“Our unwavering view is that tech stocks could have another 25%-plus upward move in the cards for 2021 as Street numbers continue to move higher and a further re-rating of the tech sector takes place,” Wedbush concluded.
Tech companies’ earnings results to boost sentiments, Amazon and Google in focus
Amazon and Google are set to unveil December quarter earnings after closing bell on Tuesday, with expectations that both tech giants are likely to top consensus estimates.
Alphabet is likely to benefit from increasing digital advertising and recovery in the economic situation. On the other hand, the largest e-commerce platform is expected to reach a hundred billion dollars quarterly revenue mark for the first time in history.