Nevertheless, the analyst does not suggest that the valuations are an indication of a major downturn in the space but more of a warning of a potential short-term correction.
“I’m just suggesting that they could pull back before you step in and make a decision to actually buy these,” Seaburg added. “It’s maybe just a little bit overextended—you’ll probably see more of a near-term pullback.”
On the other hand, Ari Wald, head of technical strategy at Oppenheimer, believes investors should lean toward larger tech names in the meantime as the underperforming sector has “plenty of catch-up potential.”
“Some of the bigger-cap tech names probably are a little bit more attractive here,” Wald added.
For instance, ETF investors can take a look at the iShares U.S. Technology ETF (NYSEArca: IYW), which focuses on sturdy, “old school” tech giants, such as Apple (NasdaqGS: AAPL), Microsoft (NasdaqGS: MSFT) and International Business Machines (NYSE: IBM), among others. IYW has a 18.9 P/E. [Use These ETFs for the Most Cash-Rich Companies]
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