So who's been buying these stocks?
Well, the FT flagged up two interesting investors in these stocks a few days ago.
One of these well-known investors is Stanley Druckenmiller who had a fantastic 30-year investment track record when he ran a hedge fund and worked with George Soros. Even though his overall record is very strong, he made a mistake by staying in technology shares for too long in 2000. But that mistake hasn't put him off tech stocks in 2017.
Druckenmiller now manages his own family office and the FT reports that in the third quarter, 41% of his long-only investments were in just five tech stocks: Microsoft, Facebook, Amazon, Alibaba and Alphabet. That's a pretty big bet.
And Druckenmiller isn't alone. Another semi-retired hedge fund star, Julian Robertson, has a quarter of his long-only portfolio in Facebook, Alphabet, Microsoft and Alibaba.
Now I've not spoken to either of these gentlemen, so I can only guess why they're so keen on these stocks, but a big part of the story must be earnings growth. With a price/earnings ratio of 35, Facebook looks expensive at first glance, but when you remember that earnings per share have grown at 66% a year for the last three years, maybe it's not so expensive at all. Also, Facebook generates a pretty good return on assets of 20%.
Admittedly, when you dig into the figures for some of the other tech giants held by these veterans, the numbers don't look as attractive as Facebook's, but what you can say is that all of these companies have the potential to grow their earnings hugely over the next decade. Sometimes in investment it can be a mistake to focus too much on the numbers, so I'd suggest that most long-term, risk-tolerant investors should have some exposure to these giants. But not as big a portfolio percentage as Robertson or Druckenmiller.
Personally, I own shares in Amazon and Alphabet, which comprise a fairly modest part of my portfolio. Having sold some of my technology holdings earlier this year, I'm not going to sell any more. I want to keep my exposure to the companies of tomorrow and I'll ride out any volatility that may come. (That volatility could come from a general market fall or from a regulatory clampdown on the likes of Facebook and Google.)
Not just the FAANGs
And anyway, these giant companies aren't the only way to play the technology story. One big growth area is clearly robotics and automation with McKinsey claiming that half of the tasks currently performed by workers could be automated in future.
If you want exposure to this sector, one US option is Intuitive Surgical. This company has developed robots that can perform operations whilst being guided by a doctor - the doctor uses a joystick to do this. You could get much more breadth by investing in two robotics ETFs that are available: The Robo Global Robotics and Automation GO UCITS ETF (ROBG) or the iShares Robotics & Automation UCITS ETF (RBOT). You can find out more about both products in our latest 'Big Call' radio show: Robotics, technology and ETFs.
I'd also say that you shouldn't write off the UK technology sector. Clearly it's much smaller than the US, but there are some promising smaller companies here. I like the Herald Investment Trust has been investing in this area for over 20 years. It's managed by Katie Potts, an experienced manager with strong views, which is just what you want if you're going to invest in an active fund. The trust's share price has risen 75% over the last three years which is a pretty decent return.