Tech Stocks Face New Blow as Strong Dollar Threatens Earnings

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The dollar’s surge threatens to eat away at earnings of big technology companies

Big tech companies, whose shares are already in their worst selloff in years, are particularly vulnerable to a rising dollar

The dollar is getting stronger. While that may sound like something to be happy about, a runup in the value of the dollar can ripple through the economy in unexpected ways. WSJ’s Julia-Ambra Verlaine explains. Illustration: Jordan KranseTechnology stocks are in the midst of their worst selloff in years. Upheaval in the currencies market might make the rout even worse.

Large technology companies generate 58% of their revenue outside of the U.S.—the highest share of the S&P 500’s 11 groups, according to FactSet. That makes them particularly vulnerable to fallout from the surging dollar. When the dollar strengthens, sales that companies earn in nondollar currencies are worth less. That in turn can shave millions of dollars off company earnings.

 

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