Tech stocks are heavily exposed to China, which could put gains at risk, according to Piper Sandler.
Tech companies are especially vulnerable to any weakness in China, with semiconductor businesses notably generating more than 30% of their sales in the country, the note read.
In April, the VanEck Semiconductor ETF (SMH) has dropped about 7%, underperforming the S & P 500's more than 3% decline during the same period.
"S & P large caps have near-record exposure to a China that is wobbly economically, with an increasingly authoritarian Heavy Hand of regulation," Lazar wrote Wednesday.
S & P Global Ratings this week noted the country could be in for a new wave of bond defaults that could come as soon as next year, further fueling those worries.
Persons:
Piper Sandler, Nancy Lazar, Lazar, — CNBC's Evelyn Cheng
Organizations:
Tech, Street Journal, VanEck Semiconductor, Devices, Intel
Locations:
China, Beijing, Shanghai