Have ASX tech shares finally reached the bottom?

When will the pain be over for ASX tech shares?

Man in shirt and tie falls face first down stairs representing falling ASX 200 bank shares today

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Key points

  • ASX shares have had a wild ride over 2022 thus far
  • But it's ASX tech shares that have borne the brunt of this volatility
  • It's left many wondering when ASX tech shares will find a market bottom

As any investor in ASX tech shares would know, the last few months have proven to be a rough ride. Since the start of 2022, the S&P/ASX All Technology Index (ASX: XTX) has lost a painful 24% or so. That includes the hefty 1.27% drop we've seen today so far. And many individual ASX tech shares have fared far worse.

Take Altium Limited (ASX: ALU). Altium shares are now down almost 28% over the year to date. Appen Ltd (ASX: APX) goes one step further with its near-40% slide this year so far. And Zip Co Ltd (ASX: ZIP) has given its investors a painful 75.5% drop since the start of the year.

Today is no different. This Tuesday has seen the S&P/ASX All Technology Index (ASX: XTX) lose another 1.27% so far. So with such losses already under the belt in 2022, many investors might be wondering when ASX tech shares will hit their bottom.

Well, according to reporting in the Australian Financial Review today, ASX tech investors should keep an eye on the US markets.

It's quarterly reporting season over in the US right now. Why does this matter? Well, ASX tech shares, in particular, often seem to take their cues from their US counterparts. So it might come as no surprise that the struggles of ASX tech shares have occurred almost in parallel with the US tech sector over the year so far.

US markets to boost ASX tech shares?

We've already seen some disastrous results, such as the ones from Netflix Inc (NASDAQ: NFLX). These sensationally saw the streaming giant lose close to 40% of its value last week. So it's perhaps no wonder our tech shares have been getting an extra dose of the jitters ever since.

But, according to the AFR report, investors hoping to see a bottom in the fall of ASX tech shares should keep watching the US markets this week. Over the next few days, we will see Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Meta Platforms Inc (NASDAQ: FB), and Amazon.com Inc (NASDAQ: AMZN) report their quarterly earnings. Add in Australian software company Atlassian plc (NASDAQ: TEAM).

The AFR report quoted Wedbush analyst Dan Ives on the matter. Ives stated that he reckons Apple and Microsoft, in particular, will help investors prevail through what he sees as a "white knuckle moment" in the markets right now. Ives is expecting both Microsoft and Amazon to report strong growth in their cloud products, and Apple to report strong expected numbers from China.

This strong showing, he predicts, will help Wall Street see that "the 'feared slowdown' is more bark than bite at this point in the cycle".

No doubt that rosy prediction will be welcomed by many ASX tech share investors right now. But we shall have to wait and see if Ives's predictions are accurate.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Motley Fool contributor Sebastian Bowen owns Alphabet (A shares), Amazon, Apple, Atlassian, Meta Platforms, Inc., and Microsoft. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares), Altium, Amazon, Appen Ltd, Apple, Atlassian, Meta Platforms, Inc., Microsoft, Netflix, and ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., and Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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