Extreme Valuations, Slowing Growth, And Rising Yields Make Tech Stocks A Dangerous Bet

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  • NASDAQ 100 valuations are not nearly as extreme as they were at the 2000 peak, but at 40x free cash flows, they are still extremely expensive.
  • Such valuations can only be justified by rapid growth, but real sales growth has been trending lower for years and sits at just 2% y/y.
  • The risks posed by this combination of expensive valuations and slowing growth are heightened by the rise in corporate bond yields, which suggests significant declines in the QQQ are likely.

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