Deutsche Bank upgrades U.S. tech, says selloff has gone too far

​Deutsche Bank turned bullish on U.S. ​technology stocks, reversing a ‌downgrade made three weeks ago, saying a sharp selloff has created an attractive buying opportunity and ⁠much ​of the AI-related risk was already priced in.

More than US$2-trillion was wiped off the Nasdaq 100’s market value last month, ​as investors reassessed AI-related ‌investments and growth expectations.

Here are more details from the brokerage’s Friday note:

• Tech and mega-cap growth stocks have lagged the rest of ‌the S&P ​500 by ‌more than 16 percentage points over the ​past three weeks, falling about ⁠11 per cent while the broader index rose ⁠nearly 6 per cent, leaving the sector near the ​low end of its historical trading range.
• “Magnificent Seven” results reinforced investor concerns about the pace of returns from heavy AI spending, contributing to recent weakness ⁠in large-cap technology stocks.
• Technology’s relative performance has fallen to the bottom of its long-term range, a level that has marked attractive entry points in recent ⁠years.
• Previous rotations back into ​tech have resulted in average gains of ⁠about 32 per cent and roughly 30 percentage points of outperformance ‌versus the rest of the S&P 500.
• Overall ​equity positioning remains relatively light despite solid earnings growth, leaving room for investors to increase exposure if corporate profits ​remain resilient