Investors would have reason to be cautious on tech stocks: The sector already has seen big gains this year and there’s a chance interest rates could still go higher. Don’t fret, said analysts at Wedbush, because the artificial-intelligence-led rally can continue.
The problem for tech investors is what Fed policy has done to bond yields, with the yield on the benchmark 10-year U.S. Treasury remaining well above 4%, the highest levels since the days of the 2008-2009 financial crisis. Higher returns on risk-free government debt give investors fewer incentives to pile into riskier bets like tech stocks, weighing on shares.
It’s all about AI, Ives and his team said. Optimism over the potentially transformational technology has been a key factor pushing the tech sector higher in 2023, and the analysts see a new stage of the rally emerging.
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