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Of the 175 key ETFs that we track, just one made a new all-time high on Tuesday – the iShares Expanded Tech-Software Sector ETF (IGV) . IGV, thus, was the first major technology ETF to hit new highs after a very turbulent past few months. Before Tuesday, IGV's last all-time high happened way back in November 21 (nearly three years ago), when the ETF hit an intra-day high of $89.76. For some context, while the SPDR Technology ETF (XLK) hit a low on the same day in November 202222, its snapback unfolded much more quickly. XLK hit a new all-time high way back in July 2023 and has kept going.
Persons: IGV's, XLK, IGV, it's, Frank Cappelleri Organizations: Software Sector, Technology, RSI, CNBC, NBC UNIVERSAL
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But can the momentum continue for AI stocks continue? But our estimates could prove to be conservative in light of recent developments like Open AI's text-to-video model Sora and management commentary from Nvidia," Marcelli said. Both Microsoft and Alphabet reported increased cloud revenue growth thanks to AI, and revenue from their AI models and applications should see significant growth in the next five years, she said. "Given the strong AI-related tailwinds, we see 18% year-over-year earnings growth in 2024 for the global tech sector, including information technology and internet," Marcelli said. 2 trades to ride the AI waveTo take advantage of further AI upside, Marcelli said UBS prefers two market subsectors: semiconductors and software.
Persons: Solita Marcelli, Marcelli Organizations: Nvidia, Business, UBS, UBS Americas, Microsoft, VanEck Semiconductor, Invesco Semiconductors, Software Sector, P Software & Services, Big Tech
Box is bucking the trend among technology names and stands to keep outperforming going forward, according to JPMorgan. Analyst Pinjalim Bora upgraded the software-as-a-service stock to overweight from neutral. The new target represents upside of 20% from Friday's close. The move follows the upgrade to neutral from underweight in March as the stock has continued to outperform the broader software sector, as measured by the iShares Expanded Tech-Software Sector ETF (IGV) . Growth should slow next year along with the broader software market, he said, but should still show a "double-digit" increase year over year.
The tech earnings season will hit its stride after the bell on Tuesday, with Alphabet and Microsoft reporting. There have been five straight weeks of inflows for tech funds, and eight for communications services funds, according to Bank of America. Most ETFs are market-cap weighted, meaning that the large tech names that are already present in most investors' portfolios have a big impact on the funds. One way to mitigate this is an equal-weighted ETF, like Invesco's S & P 500 Equal Weight Technology ETF (RYT). Some stocks typically thought of as "tech" names, such as Meta Platforms, are classified by some firms as communications services or consumer discretionary and are not always included in information technology ETFs.
Software stocks have taken a beating this year, but Goldman Sachs thinks there are some names in the space that can withstand a sharp economic downturn. As of Monday, it traded more than 40% below its 52-week high. Despite all of this, Goldman's Kash Rangan was able to identify some software stocks that can be resilient despite an economic "hard landing," or if the U.S. economy tumbles into a recession. The tech giant is down about 30% year to date and has fallen 32% since reaching a 52-week high last November. Goldman rates intuit as a buy and sees upside of roughly 51% from Friday's close.
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