Tech firms reach record highs despite concerns



Technology stocks have reclaimed record highs, making them one of the first groups to put last year’s carnage behind them. But everywhere else you look in the industry, bad news is overwhelming the good.

Profits are shrinking at an alarming pace, valuations are reflating and politicians want to break the companies up. Semiconductor orders have slumped, and spending on infrastructure to support the cloud is off. And yet the addiction won’t break. Shares are up more than 30% since Christmas.

It’s a familiar sight to anyone who’s been watching the broader US stock market, which just posted its best quarter in 10 years even as earnings estimates slid. However grim things look, too much money has been lost by sitting out.

Mike Wilson, the chief US equity strategist at Morgan Stanley, says groupthink is taking over, a force that while capable of provoking powerful rallies, usually precedes a cycle’s peak.

“I can’t remember a time in my career when institutional investors have been so preoccupied with what everyone else is doing,” said Wilson, who advised investors to avoid tech stocks.