Deutsche Bank turned bullish on US technology stocks, reversing a downgrade made three weeks ago, saying a sharp selloff has created an attractive buying opportunity and much of the AI-related risk was already priced in.
More than $2 trillion was wiped off the Nasdaq 100's market value last month, as investors reassessed AI-related investments and growth expectations.
Here are more details from the brokerage's Friday note:
Tech and mega-cap growth stocks have lagged the rest of the S&P 500 by more than 16 percentage points over the past three weeks, falling about 11% while the broader index rose nearly 6%, leaving the sector near the low end of its historical trading range
"Magnificent Seven" results reinforced investor concerns about the pace of returns from heavy AI spending, contributing to recent weakness in large-cap technology stocks
Technology's relative performance has fallen to the bottom of its long-term range, a level that has marked attractive entry points in recent years
Previous rotations back into tech have resulted in average gains of about 32% and roughly 30 percentage points of outperformance versus the rest of the S&P 500
Overall equity positioning remains relatively light despite solid earnings growth, leaving room for investors to increase exposure if corporate profits remain resilient
(Reporting by Rashika Singh in Bengaluru; Editing by Harikrishnan Nair)
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