Today, the belief in sustained growth reflected in the high valuations of technology companies seems to be becoming a myth rather than a reality.

On Tuesday, local time, Netflix Inc (NFLX.US) first triggered a crisis of confidence in the growth of technology companies. Investors were shocked by the loss of users for the first time in more than a decade, according to Netflix Inc's Q1 financial results. On Wednesday, the stock plunged more than 35%, dragging down the streaming sector and other technology stocks.

Tesla, Inc., arguably the model of growth stocks, also reported results after Wednesday's trading, giving investors another opportunity to judge whether these fast-growing technology companies can continue to grow amid rising Treasury yields and rising inflation. Tesla, Inc. Q1 results live up to expectations, profits exceed expectations, and the company's Q1 gross profit margin is as high as 32.9%, an average growth of nearly 2 percentage points per quarter, up from 30.6% last year. This means that for every car Tesla, Inc. sells, he can get a gross profit of more than 100000 yuan (calculated on the basis of domestic ModelY prices). However, Tesla, Inc. said the supply chain problem will continue throughout 2022. The stock rose more than 5% in after-hours trading after the results were announced.

But Dan Suzuki, deputy chief investment officer of Richard Bernstein Advisors, remained wary, saying: "behind the high valuations is a strong belief that these companies will continue to achieve unprecedented growth and that they are all likely to be winners. However, we are beginning to see more and more evidence questioning these assumptions. "

The Nasdaq 100 now trades at 32 times forward earnings, compared with 23 times for the S & P 500, according to the data. But the tech-heavy Nasdaq fell 1.22% on Wednesday after rising earlier this week.

When the tide fades, who is swimming naked and who is making money?

Of course, many investors are not discouraged, they still believe that companies such as Apple Inc (AAPL.US) are one of the best targets for reasonable prices and reliable growth. Apple Inc's shares also barely changed on Wednesday, outperforming the S & P so far this year.

And as central banks seek to fight inflation by raising interest rates, established technology company IBM (IBM.US) has been popular with investors this year and announced better-than-expected revenue and guidance on Tuesday, prompting Wall Street banks, including Morgan Stanley, Bank of America and Credit Suisse, to raise their target prices. IBM's first-quarter revenue was $14.2 billion and earnings per share were $1.40, both above market expectations, according to the data.

"after two consecutive quarters of better-than-expected results, our optimism about the stock has gradually increased," said Erik Woodring, an analyst at Morgan Stanley. " The analyst expects IBM revenues to grow by 5 per cent (at fixed exchange rates) by 2022, compared with about 4 per cent previously.

Woodring added that current market conditions were affected by volatility and uncertainty and that since more than half of IBM's revenues were recurring rather than one-off transactions, the company would outperform other hardware companies it tracks in the current environment.

Nonetheless, Netflix Inc's thunderous performance has raised concerns in the market that companies like Shopify Inc (SHOP.US), which enjoy all the dividends of the epidemic, will also bring disappointing results.

Most of the biggest falls on Wednesday were from companies such as Meta Platform (FB.US), which fell nearly 7.8 per cent on Wednesday, the biggest drop in more than two months, while Peloton (PTON.US) and DocuSign (DOCU.US) both fell more than 9 per cent.

Craig Erlam, a senior market analyst at Oanda, said Netflix Inc was urging investors to reassess the long-term holding prospects of many technology stocks. In an era of tight household budgets, it makes people wonder whether streaming services like Netflix Inc will become a major consideration for families in cutting spending. In addition, what other technical services will be considered? "