Goldman’s David Kostin says a tech disconnect is the ‘single greatest mispricing’ in U.S. equities

Goldman’s David Kostin says a tech disconnect is the ‘single greatest mispricing’ in U.S. equities

LONDON — A substantial disconnect in the U.S. tech sector is top of mind for investors in 2022, according to Chief U.S. Equity Strategist David Kostin. U.S. tech sold off sharply in the first week of the year, taking the into correction territory briefly on Monday before rallying to snap a four-day losing streak. Meanwhile while the suffered its second-worst opening week since the Lehman Brothers collapse. Investor skittishness has been driven largely by the prospect of a higher interest rate environment, with the Federal Reserve striking a more hawkish tone over the past month. Markets are now preparing for potential interest rate hikes, along with a tightening of the central bank's balance sheet. As a result, analysts broadly tech names that have benefitted from ultra-loose monetary policy necessitated by the Covid-19 pandemic as that stimulus unwinds. "The single greatest mispricing in the U.S. equity market is between companies that have high expected revenue growth but low or negative margins, and on the other hand high growth companies with positive or very significantly positive margins. That gap has adjusted dramatically in the last year," Kostin told CNBC Monday ahead of the Wall Street giant's Global Strategy conference. Kostin highlighted that