Tech is bracing for some genuine fear and loathing in Las Vegas next week.
Against a backdrop of a shaky stock market, tariff talks with China, and the threat of a recession roiling the tech and chips markets, the massive Consumer Electronics Show kicks off on Jan. 6 in the Nevada desert. It’s the first time since 2009 that CES has opened with the Nasdaq Composite in a bear market.
A year ago, Nvidia (ticker: NVDA) was tech’s hottest stock and Apple (AAPL) was well on its way to becoming the first publicly traded U.S. company to reach $1 trillion in market value. Now, all bets are off: Nvidia tumbled 31% in 2018. Apple fell 7%, and has had a terrible start to 2019.
The worst has come since early October: Nvidia stock has plunged 53%, while Apple stock is down 36%. (Nvidia continues to deal with leftover inventory after the cryptocurrency implosion.)
Micron Technology (MU) CEO Sanjay Mehrotra projected unbridled optimism when he met with Barron’s at CES a year ago, and his company reported better-than-expected fiscal-second-quarter results a few months later.
But his chip company’s shares plunged 23% in 2018, and it offered a gloomy forecast during its earnings report in mid December.
Weakness in the chip market has had a ripple effect throughout tech, underscoring a slowdown in customer demand while heightening concerns about an economic downturn.
There’s still muted optimism in Silicon Valley over the 2019 tech initial-public-offering class, which “could be the best year in at least a decade,” according to Sandy Miller, a general partner at Institutional Venture Partners and one of the deans of Silicon Valley’s iconic Sand Hill Road. IVP is an investor in Slack Technologies and CrowdStrike, two of the hottest-rumored IPOs in 2019. The Valley’s reservations, Miller said, have been underscored by there being “no parties before the actual IPO.”
Many tech IPO candidates are fully aware that they’re “at the mercy of the greater world,” said Trish Costello, general partner of Portfolia Funds.
For many years, CES could be counted on to revive tech’s hopes. There’s nothing like a big product launch to get consumers buying more tech and executives investing in things like chips and infrastructure. But this year, the next big thing seems smaller than ever.
Some 4,500 exhibitors will occupy 2.8 million square feet of space across Las Vegas this week, hoping to change the tech narrative mired in privacy issues, weak retail sales, and, of course, the bear market.
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There’s plenty of hope around 5G, but that’s increasingly looking like a 2020 or even 2021 event. There’s continued hype around artificial intelligence, virtual reality/augmented reality, self-driving cars, digital heath, and the Internet of Things. But those categories have been big CES story lines for several years now. One category that’s likely to get increased attention this year? Robotics. Talk about a 1980s throwback.
We’ll be in Vegas pushing executives for how those products might really move the needle in 2019. We’ll also be listening to keynote addresses from LG Electronics (066570.South Korea) President I.P. Park, IBM (IBM) CEO Ginni Rometty, Verizon Communications (VZ) CEO Hans Vestberg, and Advanced Micro Devices (AMD) CEO Lisa Su. And we’ll be looking at how the market reacts. Stay tuned.
Write to Jon Swartz at jonathan.swartz@dowjones.com