Deutsche Bank upgrades US tech stocks to overweight after selloff
The bank reversed a recent downgrade, saying share-price declines had already accounted for much of the risk surrounding AI.
Deutsche Bank has raised its rating on US technology stocks to overweight, Reuters reported, reversing a shift to neutral about three weeks earlier. Its strategists argued that the sector’s recent decline offered investors an opportunity to buy.
In a client note, the strategists said prices now reflected much of the risk associated with AI. Investing.com identified the authors as Binky Chadha, Deutsche Bank’s chief strategist, and Parag Thatte. The previous downgrade, on October 9, was described at the time as a short-term decision, according to MacroBusiness.
The bank said large technology and growth stocks had lost about 11% over three weeks, against a rise of almost 6% for the remaining S&P 500 stocks. That performance put technology shares close to the low end of their historical range relative to the broader market.
The strategists said similar relative levels had frequently preceded buying opportunities in recent years. Following earlier rotations into technology, the sector returned about 32% on average, outperforming the remaining S&P 500 stocks by about 30 percentage points. The bank also argued that relatively low investor shareholdings left capacity for further buying if corporate profits remained resilient.
The assessment included cautions. According to Investing.com, Deutsche Bank cited potential technology regulation following the US midterm elections and a broader geopolitical crisis as risks, while warning that a major market shock could push shares lower.
