Latest Tech Rout Could Be More of a "Shake-Out," Experts Say

Big tech’s dominance has been well-documented during the pandemic, but inflation fears have dragged the sector down in what could be somewhat of a “shake-out” according to some market experts.

That said, big tech has been brought down to buyable levels for some investors when it seemed like certain household names in the sector may have been overvalued following the pandemic. Now that the prices of these stocks have come back down, they’ve presented a value option for investors, assuming that the worst is over.

“Clearly there is a question of what should the exact market value be of some of these models, but the underlying business models are true business models — not only now but for the future, in terms of delivering services, advice and what have you digitally,” UBS CEO Ralph Hamers told CNBC.

The latest tech rout has many juxtaposing the downturn to what happened in the late 90s/early 2000s when the DotCom bust occurred. Prices of internet-related stocks were pushed to exorbitant levels before a mass sell-off forced companies with strong fundamentals (or actual fundamentals in certain cases) to survive.

However, the latest rout has its nuances. Companies seeing downward sell-off pressure can sustain in the long term.

“It is not like 20 years ago in [the dotcom bubble]. We had some models that were just models on paper and not real,” Hamers added. “The last 20 years, we have been able to show that there are real changes happening in retail businesses, in financial businesses etc., and that trend is not going to stop because of what we see currently.”

“The valuation levels have come down, basically, in all stock markets, but the profits are still there of the companies, so we see a little bit of a shake out that is happening,” said Credit Suisse Chairman Axel Lehmann.

An ETF to Buy the Dip

Investors looking at this shake-out of sorts have options to buy the dip if they feel compelled. One is the Invesco NASDAQ 100 ETF (QQQM) to get exposure to big tech’s heaviest hitters.

QQQM is based on the NASDAQ-100 Index, which includes securities of 100 of the largest domestic and international non-financial companies listed on Nasdaq. At a 0.15% expense ratio, the fund can also be used as a trader’s tool like its bigger brother, the Invesco QQQ Trust (QQQ).

For more news, information, and strategy, visit the Nasdaq Investment Intelligence Channel.

Nasdaq Resources & Reports