The stocks of the well-known “Magnificent Seven” group of big tech companies have experienced a rough start in 2024. However, despite these setbacks, bond investors seem undeterred.
Among the six companies in the group that have issued bonds — Tesla Inc., Amazon.com Inc., Apple Inc., Microsoft Corp., Nvidia Corp., Google parent Alphabet Inc., and Meta Platforms Inc. — there has been a recent uptick in bond buying. Notably, Tesla Inc. had previously issued convertible bonds, but they have since been converted to equity.
According to data-solutions company BondCliQ Media Services, the following chart provides an overview of flows from the past three days, with Amazon.com Inc., Apple Inc., and Microsoft Corp. accounting for the majority of activity. Meanwhile, Nvidia Corp., Google parent Alphabet Inc., and Meta Platforms Inc. also played a part in this bond buying trend.
Furthermore, the breakdown of buying by client type is represented in the chart below:
Although there has been a slight increase in spreads to Treasuries during this period, it has not deterred buyers. Despite the 10-year Treasury yield climbing above 4%, these reputable companies still offer an attractive yield. Given their quality, Big Tech bonds continue to present an appealing investment opportunity.
Stocks in Decline: Apple, Amazon, Tesla, Nvidia, Alphabet, and Meta
The stocks have had a rocky start to the year, with Apple leading the way in declining performance. Currently, Apple’s stock is down 5.5% for the year due to downgrades from Barclays and Piper Sandler.
Piper analyst Harsh Kumar recently downgraded Apple’s stock from overweight to neutral. His concerns stem from worries about valuation and pressures in the smartphone market. Kumar specifically mentioned his apprehension about handset inventories in the first half of the year, as well as predicting a slowdown in growth rates for unit sales. This is noteworthy as iPhones make up roughly half of Apple’s revenue.
Another analyst, Tim Long from Barclays, also downgraded Apple earlier this week. Long changed his stance from neutral to underweight.
Other major tech companies have also seen declines in their stock prices. Amazon is down 3.9% for the year, Tesla has declined by 3%, Nvidia is down 2.6%, Alphabet is down 1.2%, and Meta has fallen by 1.4%.
Furthermore, the Nasdaq Composite Index (COMP) has been on a downward trend for five consecutive days, putting it on track for its longest losing streak since October 12, 2022, when it experienced six consecutive days of decline, according to Dow Jones Market Data.
