MSFT, AAPL, AMZN, FB, NVDA: Why Are Tech Stocks Up Today?

Today, a wide range of large-cap tech stocks are surging, as investors continue to digest the current environment. Indeed, today’s heat map in the overall market is looking very green. And that’s a very good thing for investors in these companies.

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Companies ranging from Microsoft (NASDAQ:MSFT) to Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:FB) and Nvidia (NASDAQ:NVDA) are taking off. For those invested either directly in these companies, or indirectly via an index exchange-traded fund (ETF), these moves are meaningful.

That’s largely because these tech stocks are key drivers of the performance of the market as a whole. After all, these mega-cap names account for a substantial portion of the overall market. Accordingly, these five companies are among the most watched stocks, and for good reason.

Many investors may simply want to bask in today’s price action. After all, it’s been a rather rough start to the year for large-cap tech stocks.

Indeed, uncertainty has been picking up right now. Whether we’re talking about the Russian invasion of Ukraine, surging inflation, supply chain issues or the fact that the Federal Reserve is now suggesting it may put its interest rate hike schedule on overdrive, there’s a lot to be concerned about today.

That said, let’s dive into what may be driving this positive price action today.

Key Drivers Taking Tech Stocks Higher Today

It should be noted that higher interest rates are generally bearish for many hypergrowth stocks. That’s because companies with a high percentage of their future cash flows located in further-out years will have those earnings discounted at a higher rate. Accordingly, valuation compression is a key concern for many investors in small- to medium-cap tech stocks right now.

However, there are many experts in the market who seem to believe that this valuation compression isn’t necessarily warranted for all stocks.

Among the bulls in this environment is veteran strategist Ed Yardeni. Via an interesting Markets Insider piece, Yardeni outlined his view of why these Fed hikes could be a good thing.

Notably, the recent valuation compression we’ve seen have made stocks cheaper. That’s across the board. Accordingly, for the highest quality blue-chip tech stocks, this could provide an excellent buying opportunity. That’s a pretty good take, in my view.

Whether we’re talking about Apple, Amazon or any of the companies on this list, they’re all solid businesses with established earnings and cash flows. These companies are certainly exposed to what could be a slowing economy. However, rate hikes usually signal that the overall economy is strong. For investors thinking long term, large-cap tech stocks are the place to be right now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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