Dear Reader,
Many leading investors have said that technology stocks are in a bubble. I will take a look at the big 5 US and global technology stocks: Apple, Google, Microsoft, Amazon and Facebook.
The technology behemoths exhibit different valuation metrics. Apple has P/E Ratio of 17.75, Google's P/E is 34.30, Microsoft's P/E is at 27.67, Amazon's P/E is 245.56, Facebook's P/E is 37.40.
The internet advertising market is growing strongly -> 10-20% a year and this trend supports the high valuations of Google and Facebook. The internet commerce is exploding, so this keeps Amazon's valuation high. The cloud services market is one of the next big things, so Microsoft's valuation is supported. Apple is thought to be increasing its market share and coupled with the growth of the smartphone market and some analysts see it's market cap surpassing 1 trillion USD.
Are they overvalued? It is difficult to say! If their respective markets continue growing strongly, they will soon grow into their valuations.
But if they are overvalued, by how much?
My verdict:
Facebook seems the most overvalued of them all. I know it has the biggest engagement, but still. I think Facebook is overvalued by 30%. Amazon is overvalued by 30%. Google is overvalued by 20%. Apple and Microsoft by 10%.
But the valuations are dynamic. If their respective markets continue to grow rapidly and there are no major new competitors, they may well prove to be undervalued in the long-term.
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Kind regards,
Petar Posledovich
Stocks valuations, analysis. Unbiased. Insightful. Property of Wolfteam Ltd., www.wolfteamedge.com If you find the blog useful, LINK TO www.posledovich.blogspot.com Stocks, Bitcoin, Cryptocurrencies, AI, analysis, insights. CLICK ADVERTISEMENTS, SHARE ON SOCIAL NETWORKS! Technology, Bitcoin, AI, company strategy, stocks analysis. Stocks, crypto involve high RISK! Nothing on this blog is meant or should be construed as investment recommendation to buy or sell securities or their derivatives!
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