Jason Reed / Reuters
- Famous economist Mohamed El-Erian said in an interview on Thursday that he doubts the overall rating of US technology companies.
- Although he accepted that their robust balance sheets and positive cash flow would ensure continued outperformance, he said he didn't know "whether the valuation still makes sense to tell you the truth".
- El-Erian's comments came a day after the Congress said from CEOs of Apple, Amazon, Facebook and Alphabet to explain how they deal with antitrust challenges.
- The economist also said that the latest US GDP data point to worrying signs of "flattening" as there are always disagreements over what to do with the next COVID-19 aid package.
- You can find more stories on the Business Insider homepage.
Mohamed El-Erian said in an interview Yahoo finance that the overall rating of US technology companies is a "real question mark" for him.
"I like the theme of Nasdaq's performance. I'm less pleased with the rating," he said on Yahoo's "On the Move."
El-Erian highlighted the technology giant's strong balance sheets, robust cash flow, competent management and growing demand for their services during the COVID 19 outbreak, suggesting that they would continue to perform well and outperform.
"But it is the overall rating that is the real question mark for me," said the economist.
"I can see that they continue to outperform because they have both the resilience and the agility to manage this economy. I just don't know if the valuation still makes sense to tell you the truth."
El-Erian's comments came a day after the CEOs of Apple, Amazon, Facebook and Google's parent alphabet testified before the congress questions related to whether the big four have an unfair advantage over the rest of the sector.
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The heads of state and government dealt with the antitrust authorities' handling of the challenges raised by the supervisory authorities.
Tech stocks, which outperformed consistently this year, held their gains at the start of the hearing.
In the same interview, El-Erian also commented on the state of the US economy.
El-Erian called the form of economic recovery a "square root" and said that an initial improvement in unemployment benefits is gradually weakening, which is worrying given the sensitivity to "political slips".
Data released on Thursday by the trade department showed GDP shrank by 33% at an annualized rate that officially marks the worst slump in GDP for the American economy.
He said that household savings skyrocketed in the second quarter as people received stimulus checks and tried to deal with the uncertainty caused by COVID-19 while pointing out that it was on Capitol Hill " persistent disagreements "on what to do next with the relief package.
"We will see an increase in voluntary savings even as jobs recover," he said.