The time has come to start nibbling at some beaten-down tech stocks, according to research firm Bernstein. The S & P 500 tech sector has tumbled nearly 25% in 2022, led by a 62% plunge in shares of PayPal. Chipmakers such as On Semiconductor, Intel and Broadcom have fallen more than 20%. Not even iPhone maker Apple has been spared the onslaught, with the stock down about 16% this year. Only four of the 76 names in the group are up this year.
The highest free cash flow margins are found in healthcare products, the report said. Bernstein added, "Additionally, our analysis of historical market drawdowns suggests that when tech is not materially overvalued vs. the market, it typically trades in line with the market during pullbacks, as was the case during" the financial crisis of 2007-2008. Sacconaghi's team also unveiled a screen showing the stocks they like the most at current levels.