Head of private equity Orlando Bravo has dire warnings about the tech industry.
"I think there's more to come," Bravo, founder of buying Tom Bravo, told news Squawk Box Europe on Thursday.
The technology sector has led the stock market for years, with Apple and Microsoft being among the most valuable companies in the world.
But in 2022, tech stocks face a payback as central banks move to curb rapid inflation. The US Federal Reserve on Wednesday made its most aggressive rate hike since 1994.
Higher interest rates make the future earnings of growth-oriented companies less attractive. As a result, tech companies, especially those with venture capital, prioritize growth over short-term profitability.
"When these companies start answering investors' questions about the path to profitability, they're not going to like what they see," Bravo said.
"It takes a lot of cost-cutting; it takes a lot of pain," he added. "And that's hard to achieve, especially in a public setting."
Dynamic tech companies have seen their rankings drop in public and private markets of late, with companies benefiting from the widespread impact of the Covid-19 pandemic being hit harder than others.
Shares of Netflix and Zoom are down about 63% and 70%, respectively. Peloton, the fitness equipment maker, has lost more than 90% of its value.
Private companies also feel the impact of selling technology shares, with buy-now-pay-later Klarna saying it will cut its rating by a third in a new funding round.
