In 2024, financial markets are grappling with a pivotal shift: the steady rise of the 10-year Treasury yield. As yields climb—driven by persistent inflation and a hawkish Federal Reserve—investors are reassessing the fundamental assumptions behind growth stock valuation. Nowhere is this more evident than in the technology sector, where companies with high future earnings expectations are seeing their multiples contract. One telling example is Biwin Storage, a Chinese semiconductor firm making headlines with its push for dual A+H share listings. While Biwin’s story is rooted in China’s domestic capital markets, its challenges mirror a global trend shaped by Fed monetary policy and macroeconomic headwinds.
The Mechanics of Yield Pressure on Tech Stocks
The relationship between Treasury yields and tech stocks is both direct and psychological. When the 10-year Treasury yield increases, it raises the discount rate used in discounted cash flow (DCF) models—the primary tool for valuing growth-oriented equities. Since tech firms often derive a significant portion of their value from long-term, uncertain cash flows, even modest increases in the risk-free rate can dramatically reduce their present value.
In early 2024, the 10-year yield surpassed 4.5%, up from around 3.8% at the end of 2023. This shift has not only made bonds more attractive relative to equities but has also heightened borrowing costs, squeezing profit margins and limiting reinvestment capacity for capital-intensive sectors like semiconductors. For companies like Biwin Storage, which operates in a cyclical, R&D-heavy industry, this environment complicates fundraising and investor sentiment—even as they pursue ambitious expansion plans such as dual listings on the Shanghai and Hong Kong exchanges.
Beyond Biwin: A Case Study in Growth Volatility
Biwin Storage’s pursuit of an A+H listing underscores its strategic intent to access deeper pools of international capital while enhancing brand credibility. However, the company’s financial profile reveals vulnerabilities common among growth tech firms today: fluctuating gross margins, heavy reliance on memory pricing cycles, and intense competition from both established players and emerging domestic rivals.
Notably, Biwin has reported significant gross margin volatility, a red flag for investors already cautious about overpaying for future growth. In periods of tight supply, margins expand rapidly—but during oversupply phases, often triggered by macroeconomic slowdowns or inventory corrections, profitability can collapse. This cyclicality makes Biwin—and similar storage and semiconductor firms—particularly sensitive to shifts in the broader economic backdrop, especially when amplified by rising 10-year Treasury yield levels.
From a U.S. analyst’s perspective, Biwin’s situation parallels that of many mid-tier American tech firms trading at elevated multiples before the 2022–2023 rate hikes. The key difference? Today’s investors demand clearer paths to profitability and stronger balance sheets before committing capital—even to innovators in critical sectors like data storage.
Fed Monetary Policy: The Invisible Hand on Tech Multiples
The Federal Reserve’s stance remains the central driver behind the current yield environment. Despite signs of moderating inflation, the Fed has maintained a restrictive policy posture, signaling fewer rate cuts than markets initially anticipated. This Fed monetary policy trajectory has kept real yields elevated, reinforcing the appeal of fixed-income assets.
For growth stocks, particularly those without near-term earnings, this creates a valuation double bind: higher discount rates reduce intrinsic value estimates, while tighter liquidity conditions limit speculative inflows. Historically, tech stocks outperform when real yields are low or falling. In 2024, the opposite is true. According to Goldman Sachs research, the NASDAQ-100’s forward P/E ratio has compressed by nearly 18% year-to-date, largely attributable to rising bond yields rather than deteriorating earnings expectations.
This dynamic places immense pressure on companies pursuing aggressive expansion through equity financing. Biwin’s A+H strategy may offer geographical diversification, but if global investors are repricing risk due to higher U.S. Treasury yields, even well-positioned firms could face lukewarm reception in public markets.
Navigating the New Normal: What Investors Should Watch
Looking ahead, three factors will shape the tech sector’s resilience in this high-yield environment:
Sustainability of Earnings Growth: Firms with consistent revenue expansion and improving operating leverage will weather the storm better. Biwin must demonstrate not just technological capability, but operational discipline.
Interest Rate Trajectory: Any pivot toward rate cuts by the Fed could ease pressure on growth stock valuation. Until then, volatility will persist.
Global Capital Flow Alignment: Dual-listed companies like Biwin depend on cross-border investor appetite. If U.S. institutional investors remain yield-chasing, Asian tech listings may struggle to attract premium valuations.
Moreover, the increasing correlation between U.S. Treasury yields and emerging market tech listings highlights the interconnectedness of global capital markets. No longer can regional stories be analyzed in isolation. A rising 10-year Treasury yield doesn’t just affect Silicon Valley—it reverberates through Shenzhen, Seoul, and beyond.
Conclusion: Valuation Discipline in a Higher-Rate World
The era of loose monetary policy that fueled tech speculation has ended. In its place, we now operate in a regime where every basis point increase in the 10-year yield forces a recalibration of growth assumptions. Biwin Storage’s journey toward dual listing is emblematic of broader challenges facing the tech ecosystem: ambition meets arithmetic.
For investors, the lesson is clear: in 2024, growth stock valuation must be grounded in fundamentals, not just future potential. As Fed monetary policy continues to anchor yield curves, only those tech firms with durable margins, scalable models, and prudent capital strategies will thrive. The rest may find that even the most promising innovations struggle to shine under the weight of rising Treasury yields.
