Shares of Facebook, Amazon, Netflix and Google (also known as the FANG stocks) all fell over 3% today as investors pulled money out of the overheated US Tech sector.
The FANG stocks have been market leaders all year and have accounted for over 40% of the NASDAQ gains year-to-date. On a valuation basis, these names have added over $600 billion to the S&P 500 even though they only make up 13% of the index.
Many analysts have been expecting a pullback in the tech sector as P/E ratios and forward guidance data have approached the levels last seen prior to the 2000 and 2008 market corrections.
It’s worth noting as a point of reference that Microsoft, which is not a FANG stock, fell 62% after the 2000 tech bubble burst and dropped 45.5% during the financial crisis in 2008.
Even after today’s sharp decline, the S&P tech sector is still up over 18% for the year.
Shares of Microsoft have jumped over 5.5% higher in after hours trade to post a new all-time high of $60.60 on strong earnings results.
The software giant posted adjusted earnings of 76 cents per share on revenue of $22.33 billion, which eclipsed analysts’ forecasts of 68 cents per share on revenue of $21.71 billion. The $22.33 billion in adjusted revenue is 2.3% higher than the same period in 2015.
Microsoft’s major intelligent cloud division, Azure, brought in $6.38 billion which underscores the firm’s ability to become a major beneficiary of the commercial shift to cloud and digital storage.