Let's leave aside the modeling and nitty-gritty calculation of higher financing costs and whether Netflix is paying more to service its debt than energy companies (the best S&P 500 performers this year). Some of tech's underperformance might come down to vibe. Speaking to Yahoo Finance's Brian Sozzi this week, Goldman Sachs Managing Director Eric Sheridan pointed out that tech is an inherently risky sector — and right now, investors crave safety because they're uncertain of the Fed's next moves. "At the end of the day, what tech investors want is visibility into a calm economic environment," Goldman Sachs Managing Director Eric Sheridan told our Brian Sozzi at his firm's tech conference this week. In order for tech stocks to do well, he added, "You really need a stable macro environment where people feel comfortable putting more risk back on in their portfolio." It's not just about feelings, though. Technology companies across the spectrum have seen lower demand recently as COVID-19 has eased and inspired consumers to re-join the physical world. Investors have had to readjust their expectations for the future growth of companies like Netflix and Meta (META). Semiconductor makers have been hit in particular as they've struggled to adjust to the tightness in supply brought on during the pandemic, followed by the unwinding of that trend. Paul Meeks, a veteran tech investor and portfolio manager at Independent Solutions Wealth Management, told Yahoo Finance that semiconductors are a key reason he's underweight tech right now. While Meeks believes in tech in the long term, he contends the current inventory correction puts them at risk right now. "I'm really worried now, because the key driver for the tech sector is semiconductors. The semiconductor stocks are in peril," he said. "Semiconductor companies will be required to lead us out, and unfortunately, they are really sagging here. I don't see near-term relief." While inflation and interest rates are two problems for tech, they're clearly not the only challenges the sector faces right now. In the short term, at least, investors might continue to stay away. |