May 11, 2016 ยท 5 minutes

After a volatile start to the year, the parade of first-quarter earnings this past month was supposed to give us an indication of how the technology industry is faring, so here is the main take away so far: There is Facebook and Amazon, and there is everyone else.

In the past four weeks, around 90 percent of publicly listed companies reported financial results for the first quarter of 2016. While stock prices in general held up fairly well, it was not a quarter to write home about. According to FactSet, aggregate earnings for the S&P 500 fell 7 percent. The good news is that this decline was better than the 9 percent drop analysts had expected. The bad news is that it marked the fourth straight quarter of year-over-year earnings declines. The last time that happened was during the Great Recession.

For all of that, most – note that I said most – stocks have held up pretty well. Since the earnings season began four weeks ago, the S&P 500 Index has managed to rise 2 percent. But the technology sector has underperformed, falling 3 percent in that period. Earnings at technology companies fell 8 percent last quarter after having grown 9 percent a year ago. So if profits have been falling outside of tech for the past year, they are only just starting to decline in the tech industry in 2016.

Perhaps even more worrisome, revenue in the tech sector fell 5 percent in the quarter. You can engineer away profit declines with the kinds of stock buybacks tech firms have thrown billions into, but it's much harder to explain away a revenue slump.

This is a problem for tech investors because for many years the narrative behind the sector has been growth. Investors came to tolerate greater volatility and sometimes absurd valuations because in the long run this was the trade-off for potentially explosive growth. That same narrative, of course, not only played out in the private world of venture investing, but in recent years became to be amplified so loudly that many startups invested heavily in pursuit of mushrooming revenue growth, even if it meant ramping up losses as well. If that strategy made any sense then (and in most cases it didn't, really), it makes less sense now.

On the other hand, just as that aggressive style of investing never quite rose to the fever pitch of a financial bubble, the current climate is far from that of a collapsing bubble. But in financial markets, where uncertainty is dreaded as much as anything else, what we're left with is something not a great deal better: an uncertain sense of dread, under which companies seek necessary capital while waiting for the other shoe to drop.

Start-up executives are uneasy being measured by the metrics of big tech, just as they quietly cringe when the tech giant says it likes to act and think like a startup. But the uncomfortable truth is that, because the world of private investment is so opaque and illiquid, what happens to large-cap companies traded in the public stock market spills over into the way startups are perceived and valued. And this is why the lackluster performance of publicly traded tech companies this past month is hardly welcome to a startup ecosystem that feels like already on thin ice.

What big tech and small tech have in common this year is that investors have a sudden interest in steady profit growth -- and the sudden loss of appetite for companies that cannot deliver. It's why Twitter and Intel saw their stocks decline after disappointing financial reports (in Intel's case, despite mass layoffs). And it's why Alphabet and Microsoft, despite recent quarters of strong bottom-line growth, also saw their stocks slump after they indicated growth below expectations.

And if you are a broadly held tech company that reveals weakness in your core business (Apple's iPhones, say, or Netflix's subscribers in the face of new competition, or, again, Twitter's branded ads) – even if that slowdown may last only a quarter or two – well then, good luck to you. Apple is down 14 percent in the past four weeks, while Netflix is down 10 percent and Twitter down 11 percent.

Who's bucking this grim trend? Why, Amazon and Facebook. Amazon's performance, as we've said, is an up-and-down affair, but the overall trajectory of the company is headed upward, so investors will look for any opportunity to jump on board. Facebook, meanwhile, continued an eerily successful pattern of growth – in new areas like Instagram as well as its core mobile platform – that must seem preternatural to any other tech company.

A year or so ago, the number of tech companies that were thought to be thriving was much larger. People talked about the FANG gang, and were pleasantly surprised to see that hoary old tech names like Microsoft and Oracle might have a place at the opulent banquet table of growth. Unicorns multiplied like mythical rabbits. Now, notable unicorns like Zenefits and Lending Club are facing CEO-felling scandals, while many others are laying off staff. And even the more promising ones like Uber and Palantir, while having little trouble raising more money, don't seem as shiny and mighty anymore.

And the fab-four FANG? Down to two: the FA. The rest of tech? Toothless this month.

Nor is there much hope that last quarter marked the bottoming out of the tech slowdown. Tech companies in the S&P 500 forecast revenue down 4 percent year on year in the current quarter and profit down 9 percent, according to FactSet. That would be a worse performance than healthcare, consumer, or any other sector outside of energy and materials, both of which are suffering from a global commodities slump.

It's tempting to extrapolate from this and say that tech is in trouble -- or worse, in a collapsing bubble. Nothing suggests anything of the sort is happening. What's happening is that tech has been undergoing a subtle but significant shift in the mindset of its investors. The easy capital it gorged on for years is slowly growing scarcer.

Which means growth isn't so easy in 2016, or so easily rewarded. It means doing business becomes a bit of a long, hard slog. You know, like business is in every other sector.