Yahoo Finance’s Allie Garfinkle joins the Live show to discuss tech stocks and how they’re looking to rebound following a steep sell-off.
BRAD SMITH: Welcome back, everyone. It's been an ugly time for tech stocks with the NASDAQ 100 down over 30% so far this year. And tech stocks now coming off of their worst two-week stretch since 2020. Yahoo Finance's Allie Garfinkle is here with us in studio with much more on tech. What are we keeping tabs on?
ALLIE GARFINKLE: Yeah, it's great to see you, Brad. It's good to be here. The Fed said there would be a lot of pain, and tech's in a lot of it. The NASDAQ, we've seen it-- we've actually seen the NASDAQ up about 2%, I think, as I was walking out, give or take, which feels pretty good, but down 30% year to date, right? That's a lot. This is a sector that was once seen as untouchable, right? You know, and it's also not part of this-- like, just one part of this sector, right? We're seeing social media, e-commerce, gig economy-- you name it, right? They're getting-- they're all getting slammed.
Snap is one of the most notable cases of this, right? Down a whopping, I believe, 77% this year, which is rough, right? But the thing that's most striking to me is it's not just a name like Snap, right? We're seeing Apple, which once felt invulnerable, down, I believe, about 18% this year to date. Google's parent, Alphabet, it's declined about 30% year to date as of this morning. So that's kind of the lay of the land right now. It's not just one area, Brad. It's everybody. Everybody's getting hit.
BRIAN SOZZI: Allie, it's so weird because we've talked to a lot of big tech executives the past two weeks-- Marc Benioff, co-CEO, and his co-ceo as well. And you get the mood that demand is still pretty good. This move in these stocks just really seems to be because of fears of higher interest rates.
ALLIE GARFINKLE: Absolutely. You know, I cannot stress enough that that connection is, I think, very clear. This is a sector, Brian, that, I think, has long thrived on low interest rates. It's long thrived on this easy money. Growth investing is inherently optimistic and is what tech has been built on. So I think on some level, this has been promised, right? I think demand is still there. Remember, tech sells to the world, right? There is no shortage of people who are interested in the services of, say, a Salesforce or of an Apple, right? We're seeing that, too, with the Apple Watch Ultra, iPhone 14.
But it's-- since Jackson Hole, this has been promised. Tech had already been on the receiving end, I think, of a lot of the pain we were seeing going into Jackson Hole at the end of August. So I think-- yes, I think there's definitely not a problem with demand per se, but it is absolutely unequivocally connected to high interest rates.
JULIE HYMAN: But at the same time, we have to ask the question of, is there a disconnect? Like, are these executives--
BRIAN SOZZI: Growth is still slowing.
JULIE HYMAN: --not seeing what's out there, right, yeah.
BRIAN SOZZI: It is slowing. So maybe last year, it's growing 30%. Maybe sales are now growing 20% to 25%. And that's not enough to support these multiples on these stocks.
BRAD SMITH: Well, yeah, and especially if they're looking at still an environment where their growth strategy is hinging on any deal making. And in the easy money-- easy money policies are being pulled back. And that makes the dealmaking harder to finance, which also means that on the FX side, where so many of these businesses are global in the tech sector, that they're going to get hit with some of the foreign exchange headwinds that they've been hit with. For now, it's going to be two quarters once we kind of wrap up this current quarter we're into.
ALLIE GARFINKLE: Yeah, this is a thing experts have been saying and I've started saying. You know, worldwide economic pain is pain for tech. Remember, it's not just the Fed. We're seeing interest rates go up across the world, right? Central banks everywhere. And, you know, advertisers are cutting spending.
I do think we-- interestingly, I think we should be looking towards earnings, right? I think we're going to see some misses. We'll see. We'll see how bad those misses are. Remember, the growth that these companies have sustained over time, you know, that kind of thriving, maybe it shouldn't continue that way, right? We'll see how it all plays out. But I do think we're going to know more in earnings in a couple of weeks, too.
BRIAN SOZZI: Good to see you in person. Allie Garfinkle, thanks so much.