The concerns surrounding the economy slipping into a recession due to tighter monetary policy have driven a sell-off in tech stocks, as evident from the benchmark Nasdaq’s 27.4% decline year-to-date. In addition, May’s consumer price index increased 8.6% year-over-year, the fastest advance in more than 40 years. The Fed is also expected to raise interest rates by a half-point next week and another half-point in July. There has even been growing speculation those rate hikes could eventually equal 75 basis points, or even 1 full point.
However, this provides a golden opportunity for investors to add quality tech stocks now trading at attractive valuations. These stocks are expected to rebound in the near term as the ongoing digital transformation, and increasing use of cloud computing, artificial intelligence (AI), and the internet of things (IoT) should continue driving the industry's growth. According to Gartner, Inc. (IT), worldwide IT spending is expected to hit $4.4 trillion in 2022, up 4% year-over-year.
