Analysts less kind to Alphabet and other 'Big Techs' ❗

With the declines recently recorded in the technology companies that make up the US100 index, analyst coverage and in particular the recommendations themselves on "Big Techs" have undergone a rather pronounced downward revisio

This is particularly true of Alphabet (GOOGL.US), which, at its peak, has increased the value of its shares by more than 45% since the beginning of the year. After recent declines, the scale has now reached almost 35%, which, when compared with other companies with slightly smaller capitalisation, is still a very good result. 

Comparison of percentage changes in valuations of the largest technology companies to other companies. Source: Factset, Goldman Sachs

The start of the week brought a downward revision of analyst forecasts for GOOGL shares. UBS downgraded the company's stock to 'neutral' from its previous 'buy' rating. Moreover, a similar decision was made by other financial institutions, including Bernstein, which reduced its rating to 'market perform' from its earlier 'outperform' rating. As the analysts add, the shares above all proceeded too quickly on the wave of euphoria around AI, which at least for the moment all along has not brought about important fundamental changes in the company's business, for this trend to be clearly supported and sustained. 

The downgrade lowers Alphabet's consensus rating - a buy, hold and sell rating - to 4,655 points, the lowest for the stock since April 2018.  Microsoft (MSFT.US) shares (consensus lowest since mid-2019) and Apple (AAPL.US) shares (lowest since November 2020) are similarly downgraded. Source: Bloomberg

It is noteworthy, however, that up to 85% of analysts still recommend buying GOOGL shares, despite the overall decline in consensus. The current situation may therefore illustrate a deceleration of the recent dynamic rallies, which are still likely to be extended. In this sphere, the key seems to be a further recessionary narrative, which possible bullish sentiment could quickly negate. Source: Bloomberg

Alphabet (GOOGL.US) share chart, D1 interval. The company's shares are experiencing a downward correction after the recent uptrend, which is now testing the support defined by the 50% Fibo elimination of the downward wave initiated in November 2021. Source: xStation 5