The gains, if they hold, could be the biggest single-day
surge for the stock in nearly two years, easing some of the concerns around Big
Tech valuation that triggered a sector-wide selloff in the past few weeks.
"The technology sector started 2022 with some of the
biggest question marks over it since the dotcom crash more than two decades
ago," said Russ Mould, investment director at AJ Bell.
"However, the largest and highest quality U.S. tech
names continue to deliver the answers the market wants with big earnings
beats."
Big Tech has seen its valuations skyrocket in the past two
years, driven by pandemic-led shifts in how people work and learn, even as
regulators around the world scrutinize the companies for allegations of
breaches of privacy and antitrust concerns.
Google's stock rose as much as 10.1 per cent to $3,030.93 in
early trading. At least 20 brokerages raised their price targets on the stock,
lifting the overall Wall Street median target to $3,450.
Alphabet also announced a 20-to-1 stock split, which will
give shareholders 19 shares for every share they hold, bringing its price down
to about $138 based on Tuesday's close.
Splitting stocks is a method companies use to woo investors
by making them more affordable. However, some brokerages, such as Robinhood
Markets, allow investors to buy fractions of shares, making the tactic less
effective.
Tesla and Apple have also split stocks in recent months to
make their shares more appealing to mom-and-pop investors.
"The split will make the shares more accessible for
retail investors and likely facilitate inclusion in the Dow Jones Industrial
Average (which is somehow still share price-weighted), but it has no
fundamental impact," J.P. Morgan analyst Doug Anmuth said.
Facebook-parent Meta Platforms, which is set to report
results on Wednesday, and Amazon.com Inc also rose about 3 per cent in
premarket trading.
Adding to the rebound in tech stocks, Advanced Micro Devices
Inc's shares jumped 12 per cent after its results topped Wall Street
expectations. Shares of rivals Nvidia, Qualcomm, Xilinx and Micron also rose.