• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Tech takes a tumble

Record-low interest rates over the past decade pushed more investors to seek out risky investments. Loss-making tech companies were, perhaps, the riskiest spot for this excess cash. Tech valuations soared since 2020, which allowed startups and tech giants to use their inflated stock as a way to retain talent.

Tech workers were paid excessive amounts of stock-based compensation. In fact, some companies like Snap and Pinterest paid up to 46% of their total compensation in the form of stock options. This boosted the total compensation of tech workers during the boom, but is now having the opposite effect as valuations plummet.

The Invesco QQQ Trust (QQQ) — a fund that tracks tech stocks — is down 14% over the past 12 months. Meanwhile, private companies have also seen their valuation plummet as much as 80%. Employees of these firms are rushing to cash out on secondary markets, according to a recent report by the Financial Times.

Companies struggling to generate profits have been the biggest losers so far. An index of loss-making firms compiled by Morgan Staney is down 54% over the past year. Many of these money-losing firms have seen their valuations settle at pre-pandemic levels.

Looking ahead, some experts believe the valuations won’t recover until the Federal Reserve pivots on its interest rate strategy. Lower or steady interest rates could make risky tech stocks more attractive. However, that’s unlikely to happen until late 2023 at the earliest, according to interest rate swaps.

Until then, investors should probably focus on highly-profitable tech companies that have been unfairly punished during this crash.

More: Best robo-advisors

Trading Tips for All Levels: Avoid These 5 Expensive Mistakes

Don't let costly errors derail your trading success. Learn about the five most expensive mistakes in options trading and how to avoid them, whether you're just starting out or have years of experience. Enhance your trading strategy today and stay ahead of the game!

Learn More

Adobe

Adobe (ADBE) has lost 21% of its value over the past year. The company underperformed the broader market by a wide margin. However, its underlying business is still thriving.

The company reported $17.61 billion in revenue for fiscal year 2022 — 12% higher than the previous year. And in September, the company acquired design platform Figma, which expands Adobe’s suite of essential designer tools.

The company is also getting involved in the upcoming Artificial Intelligence boom by tracking the way its users use essential tools and integrating OpenAI’s tools with Figma.

The stock trades at a price-to-earnings ratio of 34.

Microsoft

Microsoft (MSFT) is also getting involved in the AI-boom. The company was an early investor in OpenAI and now has access to ChatGPT for its Bing search engine. The integration could be completed by early this year, which means the online search market is on the edge of disruption.

But none of this is reflected in the stock price. Microsoft has lost 12% of its value over the past year. It’s now trading at just 28 times net earnings per share.

Follow These Steps Once Your Portfolio Reaches $150K

If you've amassed a $150k+ portfolio, it's time to meet with a trusted advisor. Zoe Financial helps you connect with fiduciary advisors to grow your wealth. Find, hire, and invest with vetted financial advisors tailored to your unique situation.

With Zoe Financial, find your top 3 advisor matches, book a free initial consultation, and pick your favorite advisor.

Get Started

Apple

The world’s most profitable tech company certainly deserves a mention on this list. Apple (AAPL) delivered $6.11 in earnings per share in its fiscal Q4 — 9% higher than the year-ago period. This year, the company is expected to launch a new virtual reality headset and continue its supply-chain migration from China to India.

Apple stock trades at 25 times earnings, making it an ideal target for investors in 2023.

Sponsored

This 2 Minute Move Could Knock $500/Year off Your Car Insurance in 2024

Saving money on car insurance with BestMoney is a simple way to reduce your expenses. You’ll often get the same, or even better, insurance for less than what you’re paying right now.

There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Vishesh Raisinghani Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.