Jennison: The outlook for tech stocks remains unchanged despite the sell-off

Richard Clode, a portfolio manager in the Global Technology Leaders team at JLL, said in general terms, technology stocks have had a strong performance so far this year, but also experienced a similar market digestion and profit retracement period in the summer of 2023, and even a similar sell-off in April. There has been a lot of chatter in the market trying to explain these situations, but in reality, nothing has fundamentally changed. Richard Clode said that while the market has been more volatile recently, the bank does not believe there has been a fundamental change in the outlook for the tech companies.

The bank is also more focused on the political developments in the US, and the increased likelihood of a Trump re-election, which has seen money flow into small caps, and also raised concerns about potential trade tensions impacting Chinese Taiwan semiconductor exports.

In addition, Richard Clode said the market is further focusing on whether the capital expenditure on AI infrastructure by the tech companies will bring in revenue and profit returns. However, the bank believes this is just a matter of time, as capital expenditure will always precede returns, and the bank has already seen this in some early results, whether it is Google's search or cloud computing business, where growth has picked up.