After more than a year and a half of a brutal bear market, tech stocks are finally catching a bid. Since the mid-June lows, the Nasdaq 100 (QQQ) is up 17.4%. Some of the factors behind the rally are an unwinding of extreme bearish sentiment, the Fed’s ‘dovish hike’, and a better-than-expected Q2 earnings season.
To be clear, the economy and stock market continue to face significant challenges. However, it’s quite likely that tech stocks will bottom before the broader market just like they topped well before the Dow Jones Industrial Average and the S&P 500. Within the tech sector, investors should consider cybersecurity stocks especially as these companies continue to deliver earnings growth while their total addressable market (TAM) continues to expand at a healthy clip.
