May 5, 2015 · 4 minutes

As earnings seasons go, the parade of financial reports these past few weeks is one that many tech companies will be happy to forget. But it's also the kind of disappointing season some may be seeing more in the future.

The tech-earnings season for the financial quarter through March began three weeks ago with Intel's inaugural report. In the period since then, the NASDAQ Composite Index has lost a little less than 1 percent – flat, basically. A handful of tech giants reported strong earnings and were rewarded with double-digit rallies in their large-cap stocks. Amazon, for example, is up 10 percent. Netflix is up 18 percent while Microsoft has risen 15 percent.

Each of these three companies not only delivered good news, but numbers that alleviated a particular investor concern: Amazon said its thriving Web Services is more profitable than most had believed; Netflix said its net subscriptions are growing ahead of its forecasts; and Microsoft's showed its transition to cloud-based businesses is gaining traction.

Some of the most closely watched names in technology saw little impact on their stock performance after they reported their earnings. Google's and Apple's shares are both unchanged since the beginning of earnings season. Still others saw modest gains as aging giants slogged through painful turnarounds: Intel gained 4 percent and IBM 6 percent.

But after several quarters of tech stocks rising on earnings, there is a also a growing sense of concern. Yahoo's stock has fallen 9 percent in the past three weeks amid the usual deterioration in its core operations. Facebook stock is down 7 percent after it missed the Street's consensus estimate for its revenue for the first time since it went public. The company is laying the groundwork for further growth, but its decline has more to do with adjusting investor expectations for growth in the near term as mobile ad revenues stabilize.

The bigger issue is the companies seeing their stocks plunge on signs of future weakness. Twitter's stock has fallen 27 percent in the past three weeks, while LinkedIn's has fallen 23 percent and Yelp's has slid 18 percent. The common denominator was that investors saw trouble ahead. LinkedIn, for example, blamed the strong US dollar, warning that it can continue to weigh on its financial performance for the rest of the year.

The truth is there were other, more worrying, factors beyond the easy culprit of a strong dollar. Twitter said that revenue could be weak through most of this year as it rolls out a new kind of ad aimed at increasing user engagement. Yelp blamed a reorg of its ad sales staff that was also aimed at keeping its revenues growing. LinkedIn also cited turnover in its sales staff as well as weakness in display ads and a shift to programmatic ad buying.

Some of the stocks that are getting hurt the most are ones that have had unrealistically high valuations for a while. While Netflix and Amazon continue to get a pass from investors on business models that invest today's profits into future growth, Twitter, LinkedIn, and to some degree Facebook are seen right now as overly expensive given uncertainties that lie in the coming few quarters.

As a rule, investors are reacting more to what the companies expect to see in the rest of 2015 than in what they saw in the first three months of the year. LinkedIn's earnings met analysts' estimates but sank when it said full-year revenue and profit will be well short of expectations. Microsoft, by contrast, rose slightly on strong earnings but didn't really take off until it explained how its enterprise cloud business would continue to grow in coming years.

The renewed sense of caution echoes the sentiment in the market one year ago, when talk about a tech bubble gave way to the much-needed correction in the prices of overvalued stocks. As painful as it may be to some investors in the moment, the return of overvalued stocks to an altitude closer to earth is exactly the kind of recalibration the market needs if stocks are going to head higher in the long run.

As was the case last year, there were a number of factors that could weigh down the broader economy and the overall stock market, starting with that strong dollar. The weak economies in Europe and Asia could leave the dollar at relatively high levels for some time. Meanwhile, oil prices are rebounding, which could hamper consumer spending. Beyond that, there is the long lingering question of when the US Federal Reserve will begin to raise interest rates, pulling the proverbial punch bowl from the party that is the financial markets.

Tech companies are used to being's relatively protected from such exogenous shocks like oil prices, forex and interest rates, but these factors affect the overall investor appetite for IPOs, which can in turn determine investor willingness to participate in ever escalating private round of investment. It's harder to buffer out those exogenous shocks when valuations, public and private, are on precariously high ground.

Just take a look at some of the ethereally high valuations. Even after its decline, LinkedIn is trading at 98 times its estimated earnings this year. Twitter's P/E ratio is 111 while Yelp's is 280. And those are just the losers of this earnings season. Some of the winners are valued at even more absurd levels: Netflix is at 360 times 2015 earnings, and Amazon's is above 1,200.

If there's a single takeaway from the recent earnings season, it's that the future cash flows and profits that these high valuations imply – the core metrics of fundamental stock analysis - may not be as certain as investors seem to think. If they will ever justify these valuations at all. Something has to give. And it may well be the investors who have in turn given these stocks their high valuations.