Tech stocks have been radically beaten-up in recent months as interest rates are hiked, but savvy investors are now starting to increase exposure to this currently out-of-favour sector, says the CEO of a global financial giant.
The observation from Nigel Green, chief executive and founder of deVere Group, one of the world’s largest independent financial advisory organisations, comes as the tech-heavy Nasdaq 100 futures rose ahead of the open on Monday, as major indexes snapped long weekly losing streaks on Friday.
He notes: “The tech-heavy Nasdaq has shed almost 27% of its value so far in 2022.
“And earlier this month – as the U.S. Federal Reserve, the central bank of the world’s largest economy, raised interest rates – the biggest technology companies, including Amazon, Meta, Alphabet, and Netflix, lost over $1 trillion in value in just three trading sessions.”
He continues: “However, as the losing streaks are beginning to be reversed and a bounce back begins, in-the-know investors understand that this year’s massive rout is now likely to be an important buying opportunity.
“You might not jump on the exact bottom of the tech wreck, but your future self in years to come will not thank you for sitting on the sidelines now.
“Clearly, avoid the ‘buy everything’ mentality, but working with a good fund manager, you can scout out the discounted tech stock.
“Why? Because their previous success is based on fundamental megatrends, which means their current low values are opportunities.
“These are real business models which are supported by demographics and accelerated by client behavioural shifts, which not only remain, but continue to grow.”
His comments come as Netflix stock has plunged almost 69% year-to-date, while another tech giant, Amazon, is down more than 35%.
These are just two examples of companies that “are still impressive, and forward-thinking with good fundamentals”, says Nigel Green.
He concludes: “Savvy investors know that technology-driven solutions and the digitalisation of our lives is set to continue at lightening pace. Therefore, adding discounted, quality tech stocks ahead of the next rally makes good sense.”