We’ve gotten used to thinking of Big Tech stocks, the mighty FAANG (give or take an M, a T, or a plus), as a unit. Societe Generale says it’s time to remember they can be rivals.
There’s no disputing that the biggest tech companies dominate stock indexes and that investors have flocked to them for years, including during the market’s rally this spring and summer. But US Equity and Asset Allocation Strategist Sophie Huynh and Head of Equity Strategy Charles de Boissezon advice focusing on what divides them.
“We believe that looking for the laggards within growth, and being long our Old Tech vs New Tech baskets could be of interest,” they wrote in a note to clients. They say the divide they’ve created separates “consumer-facing companies or platforms with user-generated content” (new tech) from “mature or enterprise-facing companies” (old tech).
And they see more upside in the latter, a group whose biggest names include Microsoft, Intel, and Apple, than in “new tech” stocks such as Amazon, Alphabet, and Facebook. That divide might be important as upside in the market, especially for the biggest names, becomes limited.
“We see two potential triggers that could bring US Big Tech outperformance to a halt,” they wrote in a note to clients. “1/ A clear swoosh-shaped recovery ahead, which could trigger a reversal of the growth versus value trade. 2/ The ongoing political scrutiny on US tech.”
WHAT TO DO: Investors who find that concept intriguing can apply it by investing in the three