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Mish Schneider Can big tech deliver big gains?

With positive earnings out for big tech companies, should investors’ appetite grow for companies like Alphabet [GOOGL], Microsoft [MSFT], and Amazon [AMZN] or should they look for more potential elsewhere?

This can be a very loaded question, as many people have favoured these companies for a long time.

As the pandemic unfolded, many new companies profited due to their innovation in this new environment.

Even companies that didn’t necessarily innovate but were already well positioned for a pandemic environment saw a large boost. Companies that helped people shop, work and recreate have been a huge focus.

With that said, large tech continues to hold up in the current market, but why buy large tech when we’ve seen even greater potential in small tech?

Let’s take MSFT, which is up around 7-8% since its past November high and 3D Systems [DDD] which has increased 450% percent since its November high.

 

 

Or, looking at AMZN, that stock has had next to no change in price since its November high.

Even Alphabet’s 16% gain since November’s highs pales in comparison to ViacomCBS [VIAC], which booked 100% gains at its peak.

When established companies such as the aforementioned are as saturated and bloated as they are, the upside potential is limited.

On the other hand, the newer and sexier, if you will, companies have lots of blue-sky potential.

How likely is it for a company like Google to double in price?

Wouldn’t you rather find new tech companies that have much greater potential than commit large amounts of money to huge companies that have limited upside?

This article was originally published on MarketGauge. With over 100 years of combined market experience, MarketGauge's experts provide strategic information to help you achieve your investing goals.

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