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Rising Tech Stocks Affected by Inflation
Rising inflation, rate hikes, and a tumultuous global economic scenario have had a significant impact on technology stocks. During the past week, five leading tech companies lost an average of 5% in value. Although inflation was relatively slower last month, it may only provide temporary relief to several organizations across the United States.
International Business Machine (NYSE: IBM)
International Business Machine (NYSE: IBM) experienced a nearly 6% loss over the week, closing at $129.43 over the weekend. The Wall Street Journal reported that the company is acquiring Apptio, a Washington-based business software development company, in a $5 billion deal. This acquisition follows IBM’s previous purchases of software companies Red Hat and Turbonic for a combined total of $35.5 billion.
IBM’s stock has displayed volatility since 2022, with a resistance level near $155 and a support level around $114. The company faced a significant downfall at the end of 2022, with shares falling by 5% on December 15. Despite the challenges, IBM reported six consecutive positive earnings, with a 7% EPS surprise in its Q1 2023 report.
Cisco Systems (NASDAQ: CSCO)
Digital communication company Cisco Systems (NASDAQ: CSCO) also experienced a decline of almost 4% in stock value over the week. Research suggests that the digital communications market may witness substantial growth due to the continuous evolution of communication technologies, resulting in widespread adoption. Social media has also remained a pivotal driver in this sector.
Similar to other tech companies, Cisco is leveraging artificial intelligence (AI) capabilities. The company’s latest AI-focused switch application-specific integrated circuit (ASIC), codenamed G200, can bring together over 30,000 graphic processing units (GPUs). This advancement falls under Silicon One, Cisco’s unified silicon architecture.
Cloudflare (NYSE: NET)
California-based cloud service provider Cloudflare (NYSE: NET) has consistently delivered positive earnings since last year. However, the company faced a weak week as NET stock fell by over 10%. The week concluded with the company’s shares closing at $63.41.
TechCrunch recently reported that Cloudflare launched their latest real-time user monitoring data software, Observatory, to replace their previous offering, Speed Tab. John Graham-Cumming, in an interview with TechCrunch, highlighted the importance of website performance in enhancing user experience.
Microsoft (NYSE: MSFT)
Microsoft Corp (NYSE: MSFT), the American technology giant, has also been impacted by the prevailing headwinds in the market. MSFT stock fell by over 2% throughout the week, but managed to recover slightly compared to other companies. Microsoft is still awaiting the completion of its $70 billion Activision Blizzard acquisition deal.
The first half of the year has proven to be successful for Microsoft, as MSFT stock gained approximately 60% during this period. Despite tough macroeconomic conditions, tech market spending is expected to reach $4.4 trillion in 2023, according to Forrestor, a Cambridge-based research and advisory company.
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