This story was originally published here.
There is no shortage of tech names that have reached new highs despite (or in some cases because of) the novel coronavirus pandemic. Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) is not one of those names, but GOOG stock is getting close.
Google is just 7% off all-time highs reached in February. At those levels, Alphabet had joined the trillion-dollar club. But as with other mega-cap names, the “trillion-dollar curse” struck. In this case, it was the market-wide sell-off that began in mid-February: GOOG stock dropped over 30% in a little over a month.
The market has regained its senses, as I thought it would. (To be fair, I wasn’t convinced it would happen quite this fast.) And GOOG has been a beneficiary. A look at the business, and tech more broadly, suggests there should be still more upside ahead.
Tech in particular has outperformed off the March bottom. As they should, investors have taken the long view. They’re not focusing on short-term disruption whose effects are temporary. Instead, they’re looking at the mid- to long-term opportunities that existed before the pandemic, and the opportunities being created in the “new normal.”
In fact, the value lost in tech in the sell-off has been mostly recaptured. The tech-heavy Invesco QQQ Trust (NASDAQ:QQQ), which I recommended at March lows, is just 1.4% off a February peak. And there’s no shortage of large-cap tech names at all-time highs.
That includes “stay at home” stocks like Zoom Video Communications (NASDAQ:ZM) and Peloton Interactive (NASDAQ:PTON). It also includes giants like Amazon (NASDAQ:AMZN), Adobe (NASDAQ:ADBE), and Nvidia (NASDAQ:NVDA).
What the market is pricing in right now is an acceleration of the long-term trends that drove tech’s rally before the pandemic. Those are the kind of trends that should back what I’ve called the “Roaring 2020s.”
To some investors, this rally seems surprising, if not foolish. Why are stocks rallying while near-term unemployment rises? It’s because investors are looking forward, not backwards. Tech’s growth may be larger and may arrive even quicker than we thought just a few months ago.
Editor's Note: Click here to keep reading.
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