Percentage point difference in performance over the last three months between Amazon and the S&P 500. As markets closed on Tuesday, Amazon stock was up 23.05% since Jan 21. The S&P 500 was down 17.59% over the same period.
Amazon is an exception even among tech stocks. Others have dropped during the past few months. Apple, Google, and Facebook have all seen their stocks fall to levels similar to the S&P 500 average. Microsoft stock has jumped up and down to finally end up breaking even. Only a few companies, such as Zoom, Netflix, and Amazon, have seen big increases.
Even though there are ups and downs of individual tech stocks, the sector is doing better than most, as Reuters reported on Tuesday. It’s encouraging to see something doing well right now. But the trend has some investors worried.
The trend could be a reflection of a growing industry with healthy margins, cash on hand, and resilient business models. As a bet on future performance, it seems sensible that investors would flock to what many consider the largest source of innovation right now.
However, it could be seen as a defensive move. By this logic, tech stocks aren’t so much better as they are less bad. This would point to skepticism about the performance of the economy as a whole in the coming months. For now, we can only hope that it’s more optimism for tech and less pessimism about the whole economy.