Big Tech stocks have stumbled this week after reporting downbeat earnings, and a valuation reset could be looming as traders digest weakness in the sector.
Traditional ad agencies have reported positive results, suggesting that obstacles are related to Big Tech, he noted.
"It's clear that there are challenges for the industry after a period of unsustainable growth coming out of the pandemic, IOS privacy changes, growing competition and macro uncertainties," he said.
The Facebook parent gave a weak revenue forecast that wiped off $65 billion from the company's market cap.
On Tuesday, the growth of digital-ad revenue was reported to have slowed due to the challenging economic landscape.
Microsoft posted its weakest quarterly sales growth in five years due to a soaring dollar.
Many of the mega-cap stocks have traded lower, but we are not necessarily trading to new lows. There may need to be a valuation reset for these stocks, since they trade at premium valuations to the market.
He thinks that predictions heading into the third-quarter earnings season mirrored the low expectations of last quarter. It wasn't until after the second quarter that analysts thought companies would cut guidance.
After a period of aggressive hiring and spending, investors are demanding financial discipline from these companies.
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