Despite Microsoft, Google's 'Spectacular Quarters,' Billionaire 'Bond King' Bill Gross Warns Against Tech, Advocates For Value Stocks

Apr 27, 202405:54 UTC

Billionaire investor Bill Gross has advised investors to steer clear of tech stocks despite Microsoft Corporation MSFT and Alphabet Inc.’s GOOG GOOGL “spectacular quarters.”

What Happened: Gross, known as the “bond king,” has cautioned investors to be wary of the tech sector. Earlier this week, he took to X, formerly Twitter, and said, “Stick to value stocks, avoid tech for now,” disclosing that he holds stock in Western Midstream Partners and energy infrastructure firm MPLX.

He went on to suggest that if investors must venture into tech, Microsoft is the only viable option, stating, “MSFT best in tech if you must.”

He also expressed doubts about holding bonds, especially with the 10-year yield surpassing 4.7% on Thursday following the GDP report. “10-year Treasury moving to 4.75%. Why own bonds? T bills yield 5.25%.”

Bill Gross
@real_bill_gross
"The day the music died."
Stick to value stocks, avoid tech for now.
MLP pipelines still have momentum but don't overweight too much. I own WES (9.9% tax deferred dividend) and MPLX (8.4%).
MSFT best in tech if you must.
10 year Treasury moving to 4.75%. Why own bonds? T...
Apr 25, 2024

Why It Matters: Gross’s advice comes at a time when the tech industry is experiencing significant shifts. On Friday, CNBC “Mad Money” host Jim Cramer said that despite Alphabet and Microsoft’s “spectacular quarters” they have barely received coverage.

The parent company of Google announced that its revenue for the first quarter rose by 15% year-over-year to $80.539 billion, surpassing the consensus estimate of $78.594 billion. The company also reported quarterly earnings of $1.89 per share, exceeding analyst expectations of $1.51 per share, according to earnings data from Benzinga Pro.

Microsoft’s revenue for the third quarter surged by 17% year-over-year to $61.9 billion, outperforming the consensus estimate of $60.804 billion. The tech giant also posted quarterly earnings of $2.94 per share, surpassing analyst projections of $2.82 per share.

However, despite these positive results, the tech sector has been struggling. Tesla Inc. TSLA reported disappointing results, but its stock rose on the announcement of a new, more affordable vehicle model. On the other hand, Meta Platforms Inc. META disappointed investors with weak guidance in its earnings report, leading to a sharp stock decline and further dragging down the tech sector.