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After meltdown, tech-bottom signals have yet to scream 'buy now'

Bloomberg
Bloomberg5/22/2022 09:33 PM GMT+08  • 5 min read
After meltdown, tech-bottom signals have yet to scream 'buy now'
"It’s hard to be patient when there's been so much carnage. But the pain should end, possibly soon." Photo: Bloomberg
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Calling the bottom in the tech-sector meltdown isn’t easy, even after a US$5.5 trillion wipe-out, yet there are some signals giving investors hope.
Tech stocks have been hammered this year as rising interest rates, slowing economic growth and soaring inflation form a perfect storm of negative catalysts. That’s hurt everyone from retail investors who loaded up on Cathie Wood’s Ark Investment exchange-traded funds last year to deep-pocketed asset managers who invested in Apple Inc.

The price charts paint a dire picture: The tech-heavy Nasdaq 100 Index just capped its seventh straight week of declines, the longest such streak since 2011, and has shed nearly 30% from its peak last year. The U.S. trillion-dollar quartet of Apple, Microsoft Corp., Amazon.com Inc. and Alphabet Inc. has led the charge lower in the latest leg of this selloff.

Yet a number of investors are starting to see a light at the end of the tunnel. The Nasdaq 100 now trades for about 20 times its estimated forward earnings -- in-line with long-term averages -- as frothy valuations built up during the pandemic recede. The Philadelphia Semiconductor Index, home to chipmakers including Intel Corp and ASML Holding NV, trades at about 15 times expected earnings for the next 12 months, well below a peak of 24 hit in early 2021.

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