Big Tech this week will show earnings are running out of steam

On Friday, the poster child for artificial intelligence, Nvidia plunged 10%, wiping out $212bn (€200bn) in market value.

While investors have partially attributed the run in megacap stocks to the impact of artificial intelligence, UBS said the surging earnings momentum was driven by “asynchronous earnings cycles” spurred by the pandemic. 

The momentum behind the shares of Big Tech giants that employ many thousands of people in Ireland is running out of steam as their earnings potential slows down, according to UBS Group. 

Ahead of this week’s earnings for a large number of the so-called Magnificent 7 tech giants, UBS cut its recommendation for six of the companies — Google-owner Alphabet, Apple, Amazon, Facebook-parent Met, Microsoft, and chipmaker Nvidia — to neutral from overweight.