Mega-cap technology stocks have led the market higher during the past few days, as some of the companies reported strong earnings, and investors viewed them as oversold.
While the S&P 500 rose 6% over the past four trading sessions, Alphabet (GOOGL) has soared 15%, Amazon (AMZN) has gained 8%, Apple (AAPL) has climbed 11%, and Netflix (NFLX) has appreciated 11%.
As for earnings, last week, Apple posted profit of more than $34.6 billion for the three months ending in December, as revenues rose 11.2% from last year to a record $123.95 billion. Both revenue and earnings per share comfortably topped analysts' estimates.
Meanwhile, on Wednesday, Alphabet registered profit of $30.69 per share for the fourth quarter, beating the FactSet analyst consensus of $27.34. And revenue hit $75.33 billion, beating analysts’ forecast of $72.26 billion.
To be sure, Meta Platforms (FB) plunged in after-hours trading Wednesday, after a weak earnings report.
But in general, strong earnings numbers have made investors enthusiastic about the stocks.
“Big tech companies are clearly the most resilient and the most profitable ones in tech, so any discounted valuation that they are facing will see a reversal as we get these earnings,” Rohit Kulkarni, managing partner at MKM Partners, told CNBC.
The big tech stocks suffered most of last month, as investors reacted to rising bond yields and anticipation of interest-rate increases by the Federal Reserve. Rising interest rates hurt tech stocks by making their future earnings streams less attractive compared to safer investments like Treasury bonds.
But investors viewed the stock declines as excessive. “These tech giants ... used to be the innovator stocks with high risk, but now they’ve become bellwether stocks that bounce back stronger and sooner than the rest of the market,” Steve Jang, managing partner at venture capital firm Kindred Ventures, told CNBC.
