Deutsche Bank upgrades outlook for US technology stocks

Deutsche Bank has raised its rating for large-cap US technology stocks from neutral to overweight, following a period of intense selling. Analysts at the bank suggest that recent price declines have created an attractive buying opportunity.

According to the bank, technology stocks have significantly underperformed the broader market, lagging behind the S&P 500 by approximately 16 percentage points over the last three weeks. While the broader index rose by about 6 percent, the tech sector fell by roughly 11 percent.

Strategists Parag Thatte, Binky Chadha, and Karthik Prabhu noted that the sector has reached the lower bound of its historical trading range. They pointed to historical patterns where similar downturns were followed by strong recoveries, with stocks averaging a 32 percent increase and outperforming the S&P 500 by nearly 30 percent.

The shift in sentiment comes as investors reassess the pace at which massive investments in artificial intelligence will generate returns, contributing to a decline in the Nasdaq 100 market capitalization of over $2 trillion in October.