Wedbush said technology stocks were a strong buying opportunity after falling last week as a steady corporate earnings season could push the industry to achieve another double-digit increase before the end of the year.
The Zhitong Finance App learned that Wedbush said in a report last Sunday that technology stocks were a strong buying opportunity after falling last week because a steady corporate earnings season may push the industry to achieve another double-digit increase before the end of the year.
Last week, technology stocks followed the general market decline, and the Nasdaq Composite Index fell 0.6%, as traders responded to a popular consumer price index report and lowered expectations for the Federal Reserve to cut interest rates. According to data from the CME FedWatch tool, the inflation level in the past three months was higher than expected, causing investors to reduce the possibility that the Federal Reserve will cut interest rates in June to 18%.
However, Wedbush said the profit environment for tech companies still seems strong, especially given the fanaticism for artificial intelligence, which has driven tech stocks to soar over the past year. The bank's strategist added that a strong earnings season could be a major positive catalyst for tech stocks, and predicted that the industry could soar another 15% by the end of 2024.
“We believe that the recent safe-haven environment and tech sell-off provides a clear buying opportunity for the upcoming tech earnings season,” the bank's strategist said. “Although high CPI, weak banking performance, and geopolitical concerns are putting pressure on the stock market, the Broadway stage and spotlight are now focused on the upcoming key technology stock earnings season, and we think this season will be strong across the board.”
According to a consumer survey conducted by Wedbush, consumer spending trends for internet companies were “strong” in the first quarter. They added that digital advertising growth is also expected to be strong, which will be a positive factor for companies such as Google (GOOGL.US), Amazon (AMZN.US), and Meta (META.US).
Meanwhile, AI spending is expected to account for 10% of corporate IT budgets this year, which will be a boon for companies such as Microsoft (MSFT.US) and Palantir (PLTR.US). Wedbush strategists expect $1 trillion in artificial intelligence spending to hit the industry in the next ten years, and the second, third, and fourth waves of spending will impact the sector in the next few years.
The report added: “Over the past month, we have carried out numerous field checks around the world, which gives us great confidence, as the baton has passed from the chip to the software stage, use cases have fully exploded, and the monetization of the AI revolution has now begun to enter the next phase of growth.”
According to information, investor sentiment on Wall Street worsened last week as traders considered whether interest rates might remain high for a longer period of time. According to the American Association of Individual Investors (AAII)'s latest investor sentiment survey, only 43% of investors said they are optimistic about stocks over the next six months.
Concerns about a recession have also increased, as high interest rates may cause the economy to contract too much and fall into recession. According to the New York Federal Reserve's latest estimates, there is a 58% chance that the US will fall into recession by March 2025.