Big tech stocks were really bid up into Q2 reports
He goes back to one important data point in assessing the strength of these companies: they have doubled their earnings power in the past two years. "Which is astounding," he said. And that gives him more comfort in the longer-term picture. "I don't see any change. Big tech is still the place to be."Even as these companies have doubled earnings growth, he doesn't think they are anywhere near peak earnings. "It's just a much higher base to build on.
These companies have grown earnings so much because the pandemic changed consumption patterns, made us all even more tech-centric, and the market made a lot of money betting on that playing out exactly as it did. But now the big question for big tech isn't about its dominance being threatened — though multiple antitrust battles loom — it is just figuring out how much more room they have to keep the earnings growth rate going higher.
Apple trailed the S&P 500, too, ahead of the earnings. One reason: it sucked so much demand forward investors are rightly concerned posting good earnings comps will get harder. But, Colas said, that might also mean it has the most room left to go up, even in the short-term as a new iPhone launches in the fall and back-to-school boosts spending on consumer tech.