The big cap technology names have taken a hit this week after the U.S. Federal Reserve signalled it might take a more aggressive approach against inflation than expected. Yet, the tech titans remain a top pick for Treasury Partners’ Richard Saperstein this year.
Why isn’t Saperstein giving up on tech giants?
According to Saperstein, mega-cap technology continues to be a great pick for longer-term investors that are not bothered by the cyclicality of the economy. On CNBC’s “Halftime Report”, he said:
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Across all of the volatility, there’s a sector that is continuing to grow earnings, they have strong moats around their business, large amounts of free cash flow and recurring revenues. So, I like the large-cap technology stocks.
In the near-term, however, he agreed things like energy could outperform as oil prices are up, or banks could rally on higher rates, steeper yield curve, or increased growth in commercial loans.
Tech is at the centre of everything
Saperstein sees tech titans at the core of the digital revolution and said their individual attributes make them a promising bet for an investment portfolio. He added:
How could you not own the cloud here or software that’s growing at up to 30% compound annual growth rate. Not to mention the passive flows of indexing, where a tremendous amount of money is going into them every day.
On the contrary, Exante’s Victor Argonov says if not a major correction, the technology sector will at least consolidate for a period now, after years of outperformance. The tech-heavy Nasdaq 100 is down more than 5.0% already for the year.
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