UBS highlighted in a research report that during the period from the lows of January last year to the highs of April this year, the shares of the "Big 6" US tech stocks, including Apple (AAPL.US) , Amazon (AMZN.US) , Alphabet (GOOGL.US) , Meta Platforms (META.US) , Microsoft (MSFT.US) , and NVIDIA (NVDA.US) , have rocketed 117%. But they and Tesla (TSLA.US) have retreated from recent highs, with Tesla and NVIDIA retracing 50% and 20% respectively.
While investors have attributed the rise in large-cap stocks to speculative sentiment and the impact of artificial intelligence, the broker believed the upside is being driven by a surge in earnings momentum, which is now collapsing. Earnings per share growth for the Big 6 is expected to slow from 42% to 16% next year, while the rest of the tech and non-tech stocks will accelerate.
UBS downgraded its rating on the Big 6 from Hold to Neutral, reflecting that cyclical factors are putting pressure on these stocks, rather than overvaluation and scepticism about AI.
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