Since hitting a peak in February 2021, institutional investor Cathie Wood’s flagship Ark Innovation ETF (ARKK) has declined more than 60%, erasing its pandemic era gains. The macroeconomic headwinds, including 40-year high inflation, the Fed’s now hawkish monetary stance, and the economic ramifications of Russia’s invasion of Ukraine, have factors that have conspired to perplex the tech sector. These factors have triggered a brutal tech selloff, with the benchmark Nasdaq Composite Index down 18.5% year-to-date. However, various high-quality companies have been trading at discounted valuations, providing investors with great buy-the-dip opportunities.
Due to rapid digitalization across various industries, growing tech dependence, and increasing corporate tech spending, the tech industry is expected to grow robustly in 2022. The adoption of emerging new and advanced technologies, including 5G, IoT, artificial intelligence (AI), robotics, and automation, might boost the industry’s growth. Wood considers the dramatic pullbacks in the tech sector as an excellent opportunity to invest in stocks with explosive long-term growth potential.
