Tech stocks: can the Nasdaq keep moving forward?

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A version of this story was first published in CNN Business’ Before the Bell newsletter. Not a subscriber? You can register here.

The big question on Wall Street: is the tech index fueled by dramatic gains Amazone (AMZN), Apple (AAPL) and Microsoft (MSFT) – shot too high, too fast?

This week could provide clues as technological profits for the period from April to June. IBM (IBM) expected to release results on Monday, followed by Microsoft on Wednesday and Intel (INTC) Thursday.

Daniel Ives of Wedbush Securities remains extremely optimistic about technology stocks, noting the huge benefits of their exposure to cloud services as millions of additional people continue to work from home.

See here: Microsoft cloud service revenues soared 39% in the first three months of 2020, compared to the same period in 2019. CEO Satya Nadella said “the equivalent of two years of transformation digital in two months ”.

In a recent note to clients, Ives predicted that tech stocks could climb another 20-30% before peaking. But that will require another quarter of strong growth in a difficult economic environment.Investors are increasingly nervous about the meteoric rise in technology stocks. According to a survey by Bank of America this month, a record 74% of fund managers said that tech stocks are a “crowded” trade, indicating that they consider the sector to be overvalued and may start looking for opportunities elsewhere.

The CBOE Nasdaq Volatility index, which tracks the volatility expectations of the Nasdaq 100 index, has also started to rise again since early June.

And the warning signs are there. The Nasdaq Composite lost 2% last Monday in a surprisingly large move following California’s decision to close indoor spaces, such as bars, restaurants and cinemas.

Global battle for technology could cost $ 3.5 trillion

As tensions between Washington and Beijing continue to escalate, Wall Street warns that new Cold War technology could cost the industry billions of dollars.

The latest: In a recent note to clients, Deutsche Bank technology strategist Apjit Walia said disruptions in supply and demand, as well as the building of a “technology wall” forcing companies to creating two sets of standards to operate in the U.S. and China could cost businesses $ 3.5 trillion over the next five years.

The loss of Chinese demand for Western technology products is of particular concern, said Walia. China accounts for 13 percent of the world’s tech sector revenues, or about $ 730 billion a year, he noted. Removing China’s supply chains and trying to comply with very different regulatory systems in China and the United States would also be costly.

These tensions are reflected in the fight for TikTok. The United States is considering banning the popular video app, which belongs to the Beijing-based start-up, ByteDance.

On the hot seat: TikTok has been attacked several times by American politicians who say it is a threat to national security because of its ties to China, alleging that the company could be forced to disclose information to the Chinese Communist Party.

TikTok has been careful to distance itself from China. He recently hired an American CEO and claims that he stores American data on servers based in the United States.

My CNN Business colleague Brian Fung reports that the Trump administration’s success in cracking down on Huawei – which the UK banned from its 5G networks last week, reversing a previous decision – could embolden the president to take on TikTok the next time.

Watch this space: while the US administration would be entirely within its rights to ban downloads from federal government devices, it is less clear how it could force states or the private sector to follow. But it may not be necessary. At least one company, Wells Fargo, has already told employees not to install TikTok on company devices.

following

Monday: Halliburton (CHOSE) and IBM (IBM) gains

Mardi: Coca Cola (KO), Lockheed Martin (LMT), Philip Morris (PM), UBS (UBS), Break (BREAK) and Texas Instruments (TXN) gains

Wednesday: Sales of existing homes in the United States; United Airlines (UAL), Biogenic (BIIB), Chipotle (CMG), Microsoft (MSFT), Tesla (TSLA) and Tourbillon (WHR) gains

Thursday: Initial unemployment claims in the United States; Confidence of German consumers; American Airlines (AAL), Hershey (HSY), Kimberly-Clark (KMB), Twitter (TWTR), Intel (INTC) and Mattel (MATS) gains

Friday: Sales of new homes in the United States; American Express (AXP), Honeywell (SHE) and Verizon (VZ) gains

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