Key insights
- JPMorgan analysts are expressing caution regarding the recent strong performance of speculative, profitless technology stocks, which have significantly outperformed broader indices like the Nasdaq 100 and S&P 500. This divergence suggests potential overvaluation and a risk of a market rotation away from these high-growth, high-risk names, potentially leading to a pullback in the tech sector.
The riskiest corners of the tech sector are outperforming their larger peers at the fastest pace in nearly six years. Now, many on Wall Street are sounding a warning to investors holding those stocks: Get out while you can.
A Goldman Sachs basket of profitless technology companies climbed 27% in May, beating the Nasdaq 100 Index by 17 percentage points for its strongest outperformance since November 2020. The group is up 57% so far this year compared with an 11% gain in the S&P 500 Index. Goldman Sachs’ basket erased early losses to climb around 0.2% in Monday trading.