(Bloomberg) — Facebook Inc. shares surged to a record high Monday, with megacap Internet and technology stocks rallying amid optimism about the strong pace of economic growth.
Shares of Facebook gained as much as 3.8% to touch an intraday record of $309.89, with the social-media company taking out a peak that has stood since August. Robust economic data on the service industries supported an advance in cyclical and growth-orientated industries, fueling the S&P 500 Index’s gain for a third day.
The communication services and information technology sectors were among the strongest-performing stocks of the day. Alphabet Inc., the parent company of Google, rose 3.9% and also surged to an intraday record. Among other notable tech gainers, Amazon.com rose 1.9%, Apple Inc. gained 2.1%, and Microsoft Corp. was up as much as 3.1% at an all-time high.
Shares of tech behemoths have broadly performed well this year — despite a rotation into value stocks — amid a strong vaccine rollout in the U.S., stoking enthusiasm of rapid economic growth. Of the market’s biggest tech names, Amazon is the only one that hasn’t hit an intraday record in 2021.
“This old guard of tech has real earnings power,” Arthur Hogan, chief market strategist at National Securities said by phone. “The companies will clearly continue to be a part of our lives, and it is a very defensible move to get back into these names.”
Facebook is scheduled to report first-quarter results later this month. Wall Street is expecting both earnings per share and revenue to rise more than 30%, according to data compiled by Bloomberg.
Facebook’s recent gains came after Chief Executive Officer Mark Zuckerberg downplayed the risk that the social-media company could see as a result of an upcoming change to Apple’s privacy policies. That issue was seen as a headwind, and a reason that Facebook warned of “significant uncertainty” in 2021 earlier this year.
The company also got a positive mention in Barron’s over the weekend, which said Facebook is a “growth machine” and its stock could gain 20% if it returns to the average premium it’s traded at for the past five years.
Wall Street Optimism
Analysts remain broadly positive on Facebook’s growth prospects, especially amid a recovery in the market for digital ads.
“The digital world we’ve grown accustomed to over the last 12 months (and counting) may be stickier than expected, even amid loosening Covid restrictions,” wrote Citigroup Inc. analyst Nicholas Jones. Morgan Stanley recently touted Facebook’s valuation and fundamental strength, and forecast “sustained outsized growth.”
Of the firms tracked by Bloomberg that cover Facebook, more than 85% recommend buying the stock, while fewer than 6% have a bearish rating. The average price target is $336, which implies upside of nearly 10%.
“I have no problem being a buyer at all-time highs if the stock is at all-time highs for a reason, and I think the optimism surrounding these names is completely justified,” Hogan said.
(Updates share price moves and adds more details and commentary throughout.)
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