Here's Why Tech Stocks Fell Today

Shares of some of the world's largest technology companies—including Facebook FB, Apple AAPL, Nvidia NVDA, and Microsoft MSFT—slumped on Friday afternoon as investors finally seem to be hesitating on this year's hottest sector.

Today's tech slump was inspired by a new note from Goldman Sachs that warned investors about potential unconsidered risk in the space.

First, the firm argued that the popular "FANG" acronym is outdated, instead proposing "FAMMG"—Facebook, Amazon AMZN, Apple, Microsoft, and Alphabet GOOGL—as the most relevant group of tech giants.

"While FANG has dominated investor focus, the nature of the acronym has expanded more broadly to encompass mega-cap tech," said Goldman Sachs analyst Robert Boroujerdi. "Indeed, the bigger story in our view is FAAMG — Facebook, Amazon, Apple, Microsoft and Alphabet — a group of five stocks which have been the key drivers of both the SPX & NDX returns year-to date."

Goldman thinks a heavy emphasis on FAAMG could pose a problem, especially if more passive investors move to these stocks for their relatively low volatility.

"The fear is that if fundamental events cause volatility to rise, these same passive vehicles will sell and exacerbate downside volatility," the note said.

Overall, Goldman sought to warn investors that these tech stocks may not be the safe havens that they are being touted as. The firm seems worried that some may not be considering certain risks, such as cyclical exposure and regulatory concerns, which are inherent to these companies.

One of the tech industry's biggest decliners was Nvidia, the red-hot chipmaker that was notably left out of Goldman's cautious report. Nvidia is facing its own pressure today, with shares falling nearly 8% after the company found itself the latest target of notorious short-seller Citron Research.

In a new report published today, Citron likened NVDA, which has gained more than 40% year-to-date, to a "casino stock" and argued that its recent rally has gone too far (also read: Citron's Andrew Left Hammers Nvidia, Shares Dip).

"In the recent frenzy in NVIDIA shares, it has added more to its market cap than the total valuation of its competitor AMD. Now it is fueled by an irresponsibly bullish number from Citi," Citron said. "Just seven months ago, their analyst team had a $90 price target. But yesterday, their target is doubled $180 ... despite the weakness in NVDA's core gaming business."

Nvidia competitor Advanced Micro Devices AMD was also down about 6% in early afternoon trading Friday. Overall, the DOW was up nearly 0.3% on Friday afternoon, while the tech-heavy NASDAQ slipped more than 1.4%.

It's worth noting that today's movement could just be a slight pullback after the sector's incredibly hot start to the year. According to our Zacks Sector Rank data, the overall "Computers and Technology" business has gained more than 19% year-to-date.

That's some insane growth. Maybe we could all use a bit of hesitation at the moment.

Interested in the week's other top stories? Make sure to check out the latest episode of the Zacks Friday Finish Line podcast. This week's stories include James Comey's testimony, AMD's AMD recent surge, and Uber's nightmarish PR disaster:

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