The Big TECH Bubble

Throughout the past five years, we have been undoubtedly beneficiaries from many new technological innovations that have altered the way we live, work, study and socialize.

The adoption rate of these new technologies have accelerated during the past 18-months, due to COVID-19 pandemic that fueled all types of online experiences as virtual meetings, e-tailing, online payments, educational portals, to name a few!

As a result, many TECH stocks are overheating due to spikes in sales during the pandemic while, Startups (in Fintech, Health-tech and AI) are exaggeratedly overvalued, with assumptions that their sales will continue multiplying in the foreseen future.

Despite my full belief, respect and adoption to 'responsible' new inventions, there could be strong signs that the current trend is neither sustainable nor profitable, due to these factors:

1. Unsustainable Revenue Growth: many of the companies who witnessed spikes in sales during pandemic may start feeling the pinch in coming quarters; as their sales dip, with a narrow window to satisfy their anxious investors.
2. Increased Competition: Gone are the days when you have two word-processors and three anti-virus s/w applications, to select from. Today, there are tens of communication platforms, hundreds of Cyber-tech ISVs and thousands of mobile apps, all competing to secure orders from the same customers.
3. Higher Valuation: VCs and SPACs are highly betting on TECH startups (who are running too far.. too fast), sending their value sky-high, despite unsatisfactory performance in most recent quarters.
4. Over Innovation: for the first time in history, we maybe overwhelmed by the quantum of new innovations and solutions that can't be commercialized on timely manner. New technologies made inventions more attainable to all countries, including the emerging ones, resulting in duplicates of ideas, products and inventions. Unfortunately, most of these will fall short of funding soon, hence will not be commercially viable to progress.
5. Adverse Economic Factors: the new normal may tend to be 'not too normal' for many. With stimulus ending, supply chain constraints, Stagflation in the horizon (stagnation with higher inflation and unemployment), sluggish GDP growth and hikes in taxes.
6. Legislators and Regulators: inability to cope with the challenges presented by these new technologies. TECH - DIGITAL inventions as, Robotics, AI, Autonomous vehicles , etc. are presenting major socioeconomic challenges that can't be discounted, and in most cases, are disrupting the labor market and creating inequality to low-skill/low-pay segment in favor of high-skill/high-pay segment.

The question in this 'BIG TECH' Bubble is not whether it will burst or not, except WHEN.. and this will only depend on how many business Leaders, Investors, VCs, Activists, and Regulators act rationally, sensibly and morally in driving this new ERA that is starting to define how our coming generations either benefit, or otherwise penalized from such innovations.