There is "clearly a lot of froth" in the tech industry, according to the CEO of Norway's massive sovereign wealth fund, who hinted that the amount of froth may depend on this week's tech earnings bonanza. (Photo : by Michael M. Santiago/Getty Images)
In the upcoming days, major American tech companies including Microsoft, Tesla, Meta, and Google parent Alphabet are all expected to report their results.
Big Tech's results come after the Nasdaq Composite fell 5.5% last week. Elon Musk's electric vehicle startup, Tesla, will report on Tuesday after the market closes.
The tech-heavy index plummeted, representing its worst weekly performance since November 2022. Nvidia, a leading computer chipmaker and artificial intelligence pioneer, taking the lead in losses.
The Norwegian Government Pension Fund Global is administered by NBIM. The biggest sovereign wealth fund in the world was created in the 1990s to invest the excess earnings of Norway's oil and gas industry. As of the end of March, it was valued at 17.7 trillion kroner ($1.6 trillion).
The fund is among the biggest investors in the world, having invested in over 8,800 businesses in more than 70 countries to date.
The wealth fund in Norway announced a first-quarter profit of almost $110 billion on Thursday, helped by strong gains from its holdings in technology firms.
At the time, Trond Grande, the deputy CEO of Norges Bank Investment Management, said that investors seemed to be taking "a more nuanced look" at the firms and business methods of the so-called Magnificent Seven U.S. IT giants, as seen by recent weakness for some of these companies.
Apple, Amazon, Microsoft, Nvidia, Tesla, Meta, and Alphabet are the Magnificent Seven.
Here are a few ways to adjust your tech portfolio (nfa):
Diversification: Spread your investments across different sectors within the tech industry and even beyond. This can help mitigate risk by reducing exposure to any single company or segment that might be particularly vulnerable to market fluctuations.
Focus on Fundamentals: Pay close attention to the fundamental health of the companies in which you're invested. Look for strong balance sheets, consistent revenue growth, and solid earnings. Companies with stable financial foundations are better equipped to weather market storms.
Risk Management: Assess your risk tolerance and adjust your portfolio accordingly. Consider reallocating assets to safer investments or hedging strategies to protect against potential downturns.
Keep an Eye on Valuations: Be wary of tech stocks that seem overvalued or inflated by speculative fervor. Look for companies with reasonable valuations relative to their earnings potential and growth prospects.
Stay Informed: Stay abreast of market trends, industry developments, and regulatory changes that could impact tech stocks. Being informed allows you to make more informed decisions about your investments.
Consider Defensive Plays: In uncertain times, consider allocating a portion of your portfolio to defensive tech stocks, such as those in essential services or established market leaders with proven resilience.
Regular Portfolio Review: Continuously monitor and review your tech stock holdings to ensure they align with your investment goals and risk tolerance. Adjustments may be necessary as market conditions evolve.
The content provided on MoneyTimes.com is for informational purposes only and is not intended as financial advice. Please consult with a professional financial advisor before making any investment decisions.
