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In the lead-up to this week’s earnings announcements from major U.S. tech companies, the CEO of the world’s largest wealth fund has voiced concerns over the tech sector’s frothiness. This follows a 5.5% drop in the Nasdaq Composite last week.
What Happened: Nicolai Tangen, CEO of Norges Bank Investment Management (NBIM), expressed his views on CNBC’s “Squawk Box Europe” on Tuesday, CNBC reported.
He stated, “There is clearly a lot of froth within the technology sector. Whether it is too much or not, that is unclear — and I guess we will get the answer later in the week when we get all these results coming through.”
NBIM, which oversees the Norwegian Government Pension Fund Global, is the world’s largest sovereign wealth fund, valued at 17.7 trillion kroner ($1.6 trillion) at the end of March. The fund, a major global investor, has stakes in over 8,800 companies across more than 70 countries. Last week, it reported a first-quarter profit of around $110 billion, largely due to strong returns on its tech stock investments.
Trond Grande, deputy CEO of NBIM, mentioned that investors are taking “a more nuanced look” at the business models of the so-called Magnificent Seven U.S. tech giants, which include Apple Inc. (NASDAQ:AAPL), Amazon.com Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOGL), Meta Platforms Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Nvidia Corporation (NASDAQ:NVDA), and Tesla Inc. (NASDAQ:TSLA).
Why It Matters: The tech sector has been under scrutiny for potential overvaluation, with the “Wizard of Wharton” warning of a possible bubble in February. The sector led a market sell-off since Apr. 12, primarily driven by high-profile tech stocks, which ironically led the rally that began in 2023.
However, the Nasdaq 100 index managed to break a three-day losing streak on Monday, as traders prepared for a crucial week of earnings reports from some of the tech sector's most influential names.
Image via Shutterstock
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