Technology stocks listed on the Nasdaq.
Peter Kramer | CNBC
Tech stocks have yet to fully recover from a miserable 2022, but they are rewarding investors who see the selloff as too extreme.
The Nasdaq Composite gained 2% this week, capping a sixth straight weekly rally for the tech index. This is the longest period since January 2020 before the Covid-19 pandemic hit the US
Stocks around the world got a big boost on Friday after a strong May jobs report and the Senate’s passage of a debt ceiling bill on Thursday evening that allowed the US to avoid bankruptcy. President Joe Biden has yet to sign the bill into law.
While last week’s gains were boosted by of Nvidia earnings report and a surge in optimism around demand for technology powering AI workloads, this week saw no notable news at the mega-cap group. But there was sustained upward momentum.
Among Nasdaq’s most valuable companies, Tesla led with an 11% increase for the week. Shares of the electric vehicle maker are already up 74% for the year after losing roughly two-thirds of their value in 2022.
Tesla and Nvidia, which are up 169% this year, have helped pull the Nasdaq down 27% in 2023, far ahead of the S&P 500 and Dow Jones Industrial Average. After hitting a peak in late 2021, the Nasdaq plunged 33% last year, its steepest decline since the financial crisis, on concerns about inflation and rising interest rates. The index is still about 18% below its all-time high.
“I’m focusing on mega-cap tech here as well as semiconductors,” Daniel Shay, vice president of options at Simpler Trading, said in an interview on CNBC’s “The Exchange” on Friday. “AI trading is absolutely phenomenal.”
In the cloud software corner of tech, some earnings reports are still making a splash.
MongoDB, the cloud database developer, jumped 33% for the week. On Thursday, the company reported earnings and revenue that beat analysts’ estimates and raised its guidance for fiscal 2024.
During MongoDB’s earnings call, CEO Dev Ittycheria said his company’s products are being used more and more as customers look for efficiency and cost reductions.
“It’s clear that customers continue to scrutinize their technology investments and must decide which technologies are must-haves and which are just nice-to-haves,” he said.
Cyber Security Provider SentinelOne and software developer PagerDuty experienced the flip side of the equation.
SentinelOne tumbled 35% for the week after the company lowered its guidance and announced layoffs. Chief Financial Officer David Bernhardt said during SentinelOne’s earnings call that large customers are using the technology less, and due to “the current macro environment, we expect these lower usage and consumption trends to continue.”
PagerDuty is down 14% this week. The provider of technology that helps IT departments respond to incidents cut its forecast for the year “in anticipation of continued pressure” on small and medium-sized businesses, CFO Howard Wilson said on the call.
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