Bigwigs in US tech scaling down stakes. Is US tech peaking?

The sharp surge in big US tech stocks have stirred a flurry of stake sales by biggies like Bezos and Zuckerberg.

Amazon.com Inc founder Jeff Bezos offloaded 12 million shares of the e-commerce company this week, his first major stock sale since 2021. The sale, worth over $2 billion took place on February 7 and 8, according to a filing.

This comes after the company announced that Bezos was planning to offload up to 50 million shares of Amazon through the year. The plans of the stake sale came at a time when the near 79 percent surge in Amazon's stock price over the past year put Bezos just an inch away from becoming the world's richest person.

According to Bloomberg's Billionaire index, Bezos' fortune increased $22.6 billion this year, reaching $199.5 billion as of February 9.

However, Bezos' case is not the only major stake sale in US big tech. There has been a sharp mega-cap rally in tech stocks over the last year amid changing rate expectations as investors hope to see earlier-than-expected rate cuts by the US Federal Reserve as the central bank manages to bring inflation down. Lower interest rates bode well with tech stocks as it reduces the the shine off lower-risk assets like treasury bonds.

Meanwhile, investors are also betting on seeing a recovery in corporate earnings as inflation comes down and the Fed manages to achieve a soft landing without causing a recession. However, the sharp run-up in the stock prices of most major US tech companies has also lured bigwigs to cash in by paring their stake.

Earlier this week, Mark Zuckerberg, the Facebook co-founder unloaded $134 million worth of shares in the parent company Meta Platforms. The recent stake sale took the total tally to $765 million worth of shares that have been sold since November last year.

This stake sale also took place at a time when the technology conglomerate's shares have skyrocketed over 160 percent in the past year, thereby more than doubling investor's wealth.

Also Read | Zuckerberg offloads another $134 million worth of shares, cashes in on Meta's record run

In November of last year, Zuckerberg's trust and various charitable and political organisations sold 682,000 shares valued at approximately $185 million. By the end of the year, the Facebook CEO had sold approximately 1.8 million shares within a span of two months, totaling nearly $428 million.

Meanwhile, the market is also buzzing with rumors of Tesla CEO, Elon Musk also offloading more shares of the electric vehicle company.

With the flurry of stake sales by US tech biggies, investor caution is also growing over the sustenance of the tech rally seen in the past year. Several analysts are ringing alarm bells over the stretched valuations of most US tech stocks, primarily the magnificent seven.

Technology stocks are generally riskier assets than treasury bonds and hence offer a higher premium. However, with the current rally seen in these counters, the premium for more upside seems limited and hence, concerns over moderation in returns are growing.

(With agency inputs)