- "I do worry a little bit that we're beginning to hear things that are reminiscent of the 1999-2000 period—the number of hits, the number of eyeballs," says UBS' Art Cashin, suggesting a new tech bubble is afoot.
- Cashin doesn't claim all tech names are taking part - many large-caps still go for less than 15x trailing EPS and 3x sales - just some of those with strong cloud and/or mobile exposure. "We're beginning to see a case of old tech/new tech."
- Though using P/Es to value growth-stage tech firms can be tricky, given how near-term earnings are often depressed by big investments, a look at price/sales multiples makes it clear valuations for many high-growth names have soared.
- Facebook (NASDAQ:FB), LinkedIn (LNKD), Zillow (NASDAQ:Z) and YELP now respectively trade at 13.4x, 13.1x, 10.9x, and 14.8x 2014E sales. The story is similar for some enterprise-focused names: Workday (NYSE:WDAY) and Splunk (NASDAQ:SPLK) go for 20.7x and 17.3x FY15E (ends Jan. '15) sales, and ServiceNow (NYSE:NOW), Tableau (NYSE:DATA), and FireEye (NASDAQ:FEYE) go for 11.9x, 14.4x, and 21.4x 2014E sales.
- Price/billings ratios for enterprise firms that depend heavily on cloud subscriptions are a bit lower than price/sales ratios, but are still often in the double-digit range.
- Tech ETFs: QQQ, XLK, QTEC, IGM, IYW, PTF, MTK, XLK, VGT, RYT, FXL, PSCT, TECL, ROM, TECS, REW, TDIV.