Tech stocks could be set to continue outpacing other industries, an analyst has told CNBC.
“Tech companies are beating earnings way better than any other group in the S&P, so we do think that’s going to continue,” Mike Bailey, director of research at FBB Capital Partners, told CNBC on Friday.
The analyst’s enthusiasm corresponds with earnings reports from some of the biggest names in Silicon Valley in recent weeks, which have been met with mixed reactions from investors.
Bailey said that despite some investors pulling out of tech stocks, they would soon return and pour money back into them.
FBB’s Bailey said: “We can look sector by sector; we do think that money could come back to tech companies. In the very short term, you could see a bit more selling, so for example tech companies generally have a higher beta. They move (and) they have more volatility than the rest of the market. So if the real market is going down 10 percent, tech may do a bit more than that in the very short term.”
Netflix, Amazon, Google and Facebook have all said they are committed to raising the level of spending on their products this year. Some analysts and investors have commented that focus should be placed on the top-line growth, revenue growth and market share of these companies.
“Just looking at fundamentals – we think tech’s going to continue growing faster than the rest of the market,” Bailey added.
“We think investors, perhaps after this week, they’ll take a deep breath, say ‘O.K., we realize tech is going to continue to grow, continue to beat raise on earnings; we’re going to come back and put money in tech.”
Source: Tech CNBC
This analyst thinks tech stocks will continue growing faster than the rest of the market