With the springtime selloff behind us, tech stocks suddenly seem like the bell of the public market ball. The Nasdaq gained 24% over the past year; Facebook soared 99% and Google notched a 32% gain. Even once-moribund Twitter is coming back to life, and bankers expect the Alibaba offering to be a blockbuster.
But there are some subtle reasons for the rally, including the fact that there are few choices for investors who hope to ride the consumer Internet boom. Many venture-backed companies are staying private longer or being acquired by the likes of Google and Facebook, so “there are fewer shares and companies in the market,” says Brendt Stallings, a portfolio manager at DoubleLine.
Money managers say that if they believe in the growth of the Internet and emerging technologies, they are all but obliged to invest in the handful of high-profile Internet names—especially if they’re looking for consumer-oriented companies, as opposed to enterprise computing plays.