Foreign stocks: Tech sector - many warning signs, many fans
The tech sector continues to dominate trading in foreign stocks. While some tech stocks are rushing from all-time high to all-time high, such as Palantir, Nvidia has only recovered, and Tesla is still trading well below its highs. There are many “red flags”, according to tech experts.
20 February 2025 FRANKFURT (Frankfurt Stock Exchange). Nvidia, Apple, Tesla - the top 3 foreign stocks with the highest turnover on the Frankfurt Stock Exchange come as no surprise. Nor is the fact that Microsoft, MicroStrategy, Amazon, ASML, Alphabet and Palantir are far ahead. There is still a lot of optimism about tech stocks. The DeepSeek shock at the end of January has largely been digested. The Nasdaq reached a new high yesterday, Wednesday.
“Across the board in the technology sector, the reporting season coming to an end in the USA once again proved to be a driver for the Nasdaq and S&P 500,” explains Marc Richter, Head of Order Book Management Equities at Steubing AG. “After the rally in the last two years, tech stocks are also outperforming the Dow Jones blue-chip index at the start of the year.”
DeepSeek: No reason to panic?
Nvidia's (US67066G1040) price setback has almost been recouped. The share is currently trading at 133 euros, compared to an all-time high of just under 148 euros. There are still plenty of buy recommendations, for example from UBS, Bernstein Research and JP Morgan. The DeepSeek models are good and very cheap, explains Bernstein. However, this is no reason for established providers to panic. In view of the rapidly rising costs of global expansion in the field of AI, innovations such as those from DeepSeek are actually necessary.
Tech expert Stefan Waldhauser from High-Growth-Investing has been warning of a bubble for some time. He has been seeing more and more “red flags” in recent weeks, which make him even more pessimistic about many popular tech stocks. “Nvidia is currently the quasi-monopolist for high-speed chips that are needed for training and querying AI models,” he explains. As a result, Nvidia can demand extremely high chip prices and achieve a gross margin of an estimated 90 percent - which is “quite unique” in the history of the semiconductor industry. “I assume that these margins will be a thing of the past in the foreseeable future,” emphasizes Waldhauser.
“Tesla has sold significantly fewer cars”
The major analyst firms and banks have become more critical of Tesla (US88160R1014) anyway. Banks such as DZ, UBS and JP Morgan are now advising to sell. Waldhauser points out that Tesla CEO Elon Musk did not even mention the weak business figures during the last earnings call. Instead, he talked about autonomous driving and the humanoid robot Optimus. “The fact that Tesla is currently selling significantly fewer cars in many markets doesn't seem to interest Elon Musk,” he explains. The Tesla share price peaked at 465 euros in December and is now down to 344 euros.
Palantir: Always new highs, then a dip
Until yesterday, Wednesday, the US software company Palantir (US69608A1088), which focuses on data analysis, was still rushing from all-time high to all-time high. There was now a significant setback yesterday. Reports of cuts in the US defense budget - an important client for Palantir - made the rounds. Waldhauser is already skeptical: “Outstanding figures for the fourth quarter of 2024 were read out that were almost too good to be true,” he says. The company is being paid more than 85 times its turnover on the stock exchange. “That has nothing to do with the real value of the company in the real world.”
Netflix: profiting from price increases
Netflix is also trading at an all-time high, at least just below it in euros (US64110L1061). “The company once again exceeded analysts' expectations with its latest quarterly figures,” explains Marc Richter. “The growth outlook had a positive impact, as did the additional offerings in gaming and live sports.”
Bernstein Research sees Netflix as an “outperformer” and has a price target of USD 1,200 (currently USD 1,043). This is based on the streaming provider's recent price increases in the USA. Standard costs are now 40 percent higher than in the first quarter of 2020.
By Anna-Maria Borse, 20 February 2025, © Deutsche Börse
About the author:
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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