Goldman Sachs is warning of "lofty" valuations for tech stocks and investors' overconfidence when it comes antitrust probes on Big Tech.
 | MON, JUN 17, 2019 | | | | DOW | | NAME | LAST | CHG | %CHG | | CSCO | 55.40 | +0.65 | +1.19% | | AAPL | 193.89 | +1.15 | +0.60% | | MSFT | 132.85 | +0.40 | +0.30% | |
| | S&P 500 | | NAME | LAST | CHG | %CHG | | AMD | 29.20 | -1.16 | -3.82% | | GE | 10.04 | -0.19 | -1.86% | | BAC | 27.93 | -0.11 | -0.39% | |
| | NASDAQ | | NAME | LAST | CHG | %CHG | | AMD | 29.20 | -1.16 | -3.82% | | FB | 189.01 | +7.68 | +4.24% | | SIRI | 5.63 | +0.07 | +1.26% | |
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Tech stocks have been Wall Street's darlings for the past decade as investors' appetite for high growth showed no signs of slowing. But Goldman Sachs is warning it's now time to pick a new favorite.
Goldman's chief U.S. equity strategist, David Kostin, sounded the alarm on "lofty" valuations for tech stocks and investor optimism when it comes to the antitrust probe on Big Tech. The double whammy is becoming a "hazard" to the group, Kostin said in a note to clients. The information technology sector has led this year's stock rebound — but that rally has also stretched valuations to sky-high levels, CNBC's Yun Li reports.
 The tech sector now has a valuation premium two standard deviations above its 10-year average across a range of metrics, Goldman noted. Within the tech group, Kostin said software stocks now have the highest multiple, near the peak of the dot-com bubble. Microsoft has led the run in software stocks, rallying 30% this year.
The second peg of Goldman's bear case is the federal government's antitrust investigation into Facebook, Google parent company Alphabet, and Amazon. Kostin told clients to reduce exposures to targeted companies in the event of a lawsuit. While markets have shown "little concern" over antitrust probes, history shows "valuations and share prices declined between lawsuit filing and resolution."
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