Despite the stock market response, tech gains have been strong across the board. Mark Avallone, founder and president of Potomac Wealth Advisors, joined TheStreet to discuss how Big tech‘s performance directly impacts consumers and how they can perform in 2024.
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Full video transcript below:
JD DURKIN: For the most part, technology gains, which is what we’re going to talk about today, have been pretty strong. Tell me about some of the biggest takeaways from the reports we’ve already seen. And Mark, I’m wondering if there are any notable trends or maybe surprises that you’ve noticed that maybe you weren’t expecting.
AVALLON BRAND: Well, what we really saw was that orientation means a lot and what happened in the rear view matters. But sometimes what they predict about the future is going to matter more. And we also saw how painful the market can be for a company like Alphabet if it simply doesn’t achieve a great growth rate in its cloud division. So there’s a mix of things because, taking Alphabet or Google, their advertising revenue was strong and YouTube was strong and that’s the vast majority of their business. And yet, when the cloud numbers were a bit disappointing, the stock fell almost 10%. Therefore, we must keep in mind that if the good news is not really good, the market can be very punitive for these companies. And then what they say about the future may be even more important.
JD DURKIN: So what do they say about the future, you suspect, right now? And perhaps how they influence individual consumers? Obviously, for the most part, if you have exposure to the S&P 500 Mark, you have exposure to these big tech companies.
AVALLON BRAND: Yes, the big thing. Well, we are looking at ai as a driver. And a company like Microsoft is now being crowned a leader in regenerative ai and as such is getting some push in the market from time to time. But it also has great underlying businesses and great management. And the market response in all likelihood reflects the full picture. We also think people are misunderstanding one aspect of 2024: a gigantic election year. And Meta and Alphabet, although we think of them as technology companies, are actually advertising companies and people need to look beyond the nomenclature that they are technology organizations and realize that they will be making a lot of advertising revenue next year. And with the election cycle in full effect, we wouldn’t be surprised to see them have positive responses to what we expect to be an enormous amount of political advertising.
