Deutsche Bank upgrades US tech, says selloff has gone too far
XLK•Deutsche Bank turned bullish on US technology stocks, reversing a downgrade from three weeks earlier and saying the selloff created an attractive buying opportunity. The Nasdaq 100 lost more than $2 trillion in market value last month.
1. Brokerage turns bullish
Deutsche Bank said much of the risk tied to artificial intelligence was already priced in after a sharp selloff in US technology stocks. The move reversed a downgrade the bank made three weeks earlier.
2. Recent sector performance
Over the past three weeks, technology and mega-cap growth stocks fell about 11%, lagging the rest of the S&P 500 by more than 16 percentage points, while the broader index rose nearly 6%. The sector was near the low end of its historical trading range, Deutsche Bank said.
3. Historical rotations
The bank said previous rotations back into technology had produced average gains of about 32% and roughly 30 percentage points of outperformance versus the rest of the S&P 500. It also said relatively light overall equity positioning could leave room for investors to increase exposure if corporate profits remain resilient.
