Hedge funds buy tech shares ahead of Apple, Amazon earnings

After spending the final months of last year cutting back on tech stocks, hedge funds have fallen back in love with technology giants ahead of Apple, Amazon earnings.

stock chart

Lu Wang, Melissa Karsh, and Claire Ballentine for Bloomberg News:

Just days before earnings land from the likes of Apple Inc. and Amazon.com Inc., professional investors turned more upbeat the industry. On Tuesday, the cohort made its largest net buying in a month, according to data compiled by Goldman Sachs Group Inc.’s prime brokerage.

Their renewed interest reflects confidence in the earnings power of a group whose resilience has been underlined during the COVID-19 pandemic. The big five — Facebook Inc., Apple, Amazon, Microsoft Corp. and Google’s parent Alphabet Inc. — are expected to report faster profit growth than the rest of the market for a 12th straight quarter, analyst estimates compiled by Bloomberg Intelligence show.

To Gene Goldman, chief investment officer at Cetera Financial Group, the latest rush by hedge funds in tech buying is likely a tactical move to brace for positive earnings surprises in coming weeks. Viewed from a wider lens, he said, these behemoths face two major headwinds: potentially higher interest rates that hurt richly valued stocks and intensified government regulations. “There’s near-term optimism, almost like a last hurrah,” he said, adding that it comes “before rising rates and any of the concerns around big tech with a Democratic government slows it down.”

MacDailyNews Take: This week will be all about Apple earnings as we expect the company to post their first quarter with over $100 billion in revenue. We’ll also be interested to see if Apple provides Q221 guidance or not (if we had to, we’d bet on not).

1 Comment

  1. So, the hedge funds will buy Apple into earnings and then quickly sell Apple for the purpose of profit-taking. That’s absolutely fantastic investing strategy for the wealthy people. Too many investors have such short-term goals. Grab the money and run to the next stock. It’s no wonder the market is so unstable.

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