The Facebook data scandal showed that the group of technology stocks known as the FANGs were operating in a "kind of fairyland," one analyst told CNBC Thursday, with J.P. Morgan adding that it is "switching preferences" away from just internet stocks.
Paul Gambles, managing director at Thailand-based advisory firm MBMG Group, called these stocks "egregiously" overvalued. He pointed towards the recent Facebook data scandal in which 87 million user profiles were scraped and the data handed over to political consultancy Cambridge Analytica.
The issue was known to Facebook in 2015.
"I think the really interesting thing is it shows sort of the kind of fairyland that FANGs have been operating in. (Facebook CEO Mark) Zuckerberg has known for a long time about this particular vulnerability," Gambles told CNBC's "Squawk Box Europe" Thursday.
"All of a sudden, the spotlight is shining on the Facebook model without the answers yet being in place as to what's going to come along and replace that," he added. "To me that just shows what a nonsense these tech valuations were that Facebook themselves behind the scenes knew they had a huge problem with their model, and yet the Facebook price just kept going up like crazy."
Some technology stocks have been under pressure this year after a strong 2017. Facebook shares are down around 12 percent year-to-date, while Alphabet is over 2 percent lower in the same time frame. Amazon, however, is up over 20 percent this year, while Netflix is 50 percent higher.